With purchases currently dominating refinancings, ARMs are moving into the purchase market in a big way, affecting turnover projections, analysts said.

JPMorgan Securities believes that the choice to move into hybrids is more a purchase issue rather than a refinancing issue. In 2003, the hybrid ARM share - though considerable for a refinancing wave - was roughly 20%, which remained consistent with its market share. The majority of refinancings are from fixed-to-fixed or ARM-to-ARM. But there seems to be a considerable shift to hybrids on purchases, which means turnover from fixed-to-ARM is a lot more common compared to refinancing from fixed- to-ARM.

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