ARMs are a good option when rates are high. ARMs first became available to American homeowners in 1981, a year when the average rate on a 30-year loan surged past 18 percent. As mortgage rates rode a rollercoaster through the 1980s, homeowners often flocked to ARMs. Rates spiked in 1984 and again in 1987, and ARMs made up more than two-thirds of all mortgages during those periods of rising rates. With fixed rates much lower more recently, ARMs probably aren’t the wisest choice for most borrowers. That’s reflected by the small number of borrowers taking ARMs — they account for less than 3 percent of mortgage applications. ARMs usually only make sense if the rate and other fees combined equal a lower APR than a fixed mortgage for the term. >>Read more about choosing between a an ARM and a fixed-rate mortgage.