A Boom in ARM Lending?

It may seem like a fixed-rate environment to most lenders, but adjustable-rate specialist Golden West, Oakland, Calif., is seeing a big increase in its business this year.Russell Kettell, Golden West's president, treasurer, and chief financial officer, told investors and analysts meeting in New York that for many borrowers, adjustable-rate loans make sense even when interest rates on fixed-rate loans are at historic lows. "Over the years, borrowers who have taken adjustable-rate loans have paid less than borrowers who have taken fixed-rate loans," he told attendees at the U.S. Bancorp Piper Jaffray financial services conference. During the first nine months of 2002, new loan volume totaled $19.0 billion, a 27% increase from the volume recorded in the first three quarters of 2001. ARMs accounted for 93% of Golden West's originations during the first nine months of this year. The company can be found online at http://www.worldsavings.com.