Inflation here? gas/grocery prices just continue to climb

B4YOU said
Disagree on some points. An ARM is 1-1.25 less than a fixed rate right now. When buying 400-600k homes with minimal down, you are talking $300/mo difference. If you think this is just a short term spike in rates, then why lock in at 5.25. The rate difference and future refi cost doesn’t make sense for a fixed. I also don’t think we see rates in the 6.5-8 range and that rates over the last few decades have trended downward. A 5-yr ARM is fixed for the first five years and average length of homeownership is 7yrs in many markets. I would be taking that 1-1.25 for the first 5 years or 18k based on my example over a fixed rate today.

I think 95% of instances a fixed makes sense, but right now I would take an ARM.

Believing that this is a short-term spike is betting against history, however. Outside of the easy money times post-Great Recession and again post-COVID, historical rates have almost always been above 6%, and in the 80s, another time of runaway inflation similar to now, the rates were as high as 14%.

In recent history, interest rates were starting to creep back up from around 2013-2019, right around the time we were truly in full recovery from the Great Recession, before they crashed again from COVID.

It's VERY possible that this is not a short-term spike, but rather a return to where interest rates would have been if not for the Great Recession and COVID.

https://www.freddiemac.com/pmms/pmms30