As fixed-rate mortgage rates are hovering around 8%, a near two-year high, and typical adjustable-rate mortgage borrowers are looking to lock in on their "teaser rate" a few years longer, many are now turning to a "hybrid" ARM. Furthermore, investors are seeing these loans as a great alternative to balloon loans.

Hybrid ARMs lock in a lower rate for a fixed period of three, five, seven and 10 years before resetting to a higher rate. Both convertible and non-convertible hybrid ARMs have been securitized, and the amount of origination is growing at the expense of the balloon loans.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.