The significant growth in the ARM share in mortgage production has a tremendous impact on all sectors in the market. In a recent report, Countrywide Securities Corp. explores this subject by looking at some recent production data.

ARMs clearly comprise a very significant percentage of applications, which is made even more noticeable when refinancings comprise about 60% of new applications, as they do currently. Countrywide noted that the percentage of ARM activity has been above 40% (in dollar terms) since early October 2003, and has not decreased even in the refi uptick seen late this winter. Previously, ARMs dropped as a percentage of total applications in periods of high refi activity, as it did during last spring's refi wave.

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