11-18 Since their introduction,the proportion of ARMs to fixed-rate residential mortgages has remained very stable over interest rate cycles.

Question

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According to data from the Mortgage Bankers Association, the proportion of ARMs to fixed-rate residential mortgages has varied greatly over different interest rate cycles. For example, ARMs comprised over 70% of all mortgages in the mid-2000s during a period of low interest rates, but fell to about 5% following the 2008 financial crisis when interest rates were low and fixed-rate mortgages were more attractive to borrowers. The proportion has since increased somewhat, but still remains lower than pre-crisis levels.

11-18 Since Their Introduction,the Proportion of ARMs to Fixed-Rate Residential