All signs will tell you that the current U.S. housing market favors buyers. In fact, that the situation represents perhaps the strongest buyers’ market in more than a decade.
But, of course, that only means so much if you still can’t afford what it will cost you to get into a home. As a result, many house hunters are turning to adjustable-rate mortgages, which often initially offer lower interest rates than the traditional 30-year fixed-rate variety.
McIntire Professor W Ben McCartney recently lent his expertise on the subject to British online newspaper The Independent, weighing in on the pros and cons of adjustable-rate mortgages.
“If homebuyers are trying to take their budget as far as they can, the lower rate on the [adjustable-rate mortgage] might be what gets them into a home they’re happy about,” he explains. While he notes that the initial rate they can secure with an adjustable-rate is often lower, automatic resetting that occurs later can be a trap if interest rates rise.
McCartney, Overstreet Fellow at the Commerce School, is an expert researcher in household finance, real estate, and urban economics. In addition to having his work published across leading economics and finance journals, he has also been quoted in media outlets such as The New York Times. McCartney has been part of the School faculty since coming to Grounds from the Krannert School of Management at Purdue University in 2022.
