[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-1-en-105":3,"doc-seo-565115-105":53,"doc-detail-565115-en":126},{"code":4,"msg":5,"data":6},0,"success",[7,14,19,24,29,34,39,44,49],{"id":8,"doc_module":9,"doc_module_name":10,"category_name":11,"show_sort_weight":12,"slug":13},11,1,"Template","Presentations",90,"presentations",{"id":15,"doc_module":9,"doc_module_name":10,"category_name":16,"show_sort_weight":17,"slug":18},12,"Resumes",80,"resumes",{"id":20,"doc_module":9,"doc_module_name":10,"category_name":21,"show_sort_weight":22,"slug":23},14,"Invoices",70,"invoices",{"id":25,"doc_module":9,"doc_module_name":10,"category_name":26,"show_sort_weight":27,"slug":28},15,"Posters",60,"posters",{"id":30,"doc_module":9,"doc_module_name":10,"category_name":31,"show_sort_weight":32,"slug":33},16,"Social Media",50,"social-media",{"id":35,"doc_module":9,"doc_module_name":10,"category_name":36,"show_sort_weight":37,"slug":38},17,"Forms",40,"forms",{"id":40,"doc_module":9,"doc_module_name":10,"category_name":41,"show_sort_weight":42,"slug":43},18,"Letters",30,"letters",{"id":45,"doc_module":9,"doc_module_name":10,"category_name":46,"show_sort_weight":47,"slug":48},21,"Paper Templates",5,"papers-templates",{"id":50,"doc_module":9,"doc_module_name":10,"category_name":51,"show_sort_weight":4,"slug":52},158,"General","general-158",{"code":4,"msg":54,"data":55},"ok",{"site_id":56,"language":57,"slug":58,"title":59,"keywords":60,"description":61,"schema_data":62,"social_meta":119,"head_meta":121,"extra_data":123,"updated_unix":125},105,"en","a-call-to-arms-adjustable-rate-mortgages-in-the-1980s","A Call to ARMs: Adjustable Rate Mortgages in the 1980s","","A Call to ARMs: Adjustable Rate Mortgages in the 1980s examines how adjustable rate mortgages (ARMs) emerged as a major residential financing instrument in the United States during the early 1980s. It explains the policy and political shifts that enabled ARMs, tracks their growing market share through the decade, and analyzes why lenders embraced ARMs despite borrower reluctance. It also frames lender-specific incentives and underlying interest-rate risk concerns faced by thrift intermediaries.",{"@graph":63,"@context":118},[64,80,101],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":11,"@type":70,"position":76},"https://docshare.wps.com/template/presentations/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/a-call-to-arms-adjustable-rate-mortgages-in-the-1980s/565115/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/a-call-to-arms-adjustable-rate-mortgages-in-the-1980s/565115.png","ImageObject",442,249,{"name":88,"@type":89},"Terk","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/pdf","2026-10-21","2026-10-12",true,{"@type":98,"interactionType":99,"userInteractionCount":76},"InteractionCounter",{"@type":100},"ViewAction",{"@type":102,"mainEntity":103},"FAQPage",[104,110,114],{"name":105,"@type":106,"acceptedAnswer":107},"What prompted the U.S. shift toward adjustable rate mortgages in the early 1980s?","Question",{"text":108,"@type":109},"Regulatory and political changes eased restrictions on ARMs, allowing thrifts and then national banks to originate them for owner-occupied homes, making ARMs a viable nationwide option in the early 1980s.","Answer",{"name":111,"@type":106,"acceptedAnswer":112},"How did the market share of ARMs change from 1982 through the late 1980s?",{"text":113,"@type":109},"The ARM share of residential mortgage originations jumped to about 40% by early 1982, peaked around 68–69% in 1984 and 1987, then fell below 30% during parts of 1983 and again declined to about 21% by June 1986 and December 1989.",{"name":115,"@type":106,"acceptedAnswer":116},"Why were lenders attracted to ARMs while borrowers were more reluctant?",{"text":117,"@type":109},"Lenders embraced the ARM concept, while borrowers hesitated, leading lenders to use low initial interest rates and restrictions on interest-rate movements to improve sell-through.","https://schema.org",{"og:url":78,"og:type":120,"og:title":59,"og:site_name":91,"og:description":61},"article",{"robots":122,"canonical":78},"index,follow",{"doc_id":124,"site_id":56},565115,1792471365,{"code":4,"msg":5,"data":127},{"doc_id":124,"user_id":128,"nickname":88,"user_avatar":129,"doc_module":9,"category_id":8,"category_name":11,"doc_title":59,"doc_description":61,"doc_content":130,"file_id":131,"file_url":132,"file_type":133,"file_size":134,"view_count":76,"is_deleted":4,"is_public":9,"is_downloadable":9,"audit_status":9,"page_count":25,"language":135,"language_code":57,"site_id":56,"html_lang":57,"table_of_contents":136,"faqs":137,"seo_title":138,"seo_description":61,"update_tm":139,"read_time":47},1099525198933,"https://ap-avatar.wpscdn.com/davatar_155a257f0dc6eb9ab79c44ca47cae57d","Professor of Economics,Boston Col-lege,and Visiting Economist,FederalReserve Bank of Boston.The author isgrateful to James A.Wilcox and col-leagues at the Boston Fed for helpfulcomments and suggestions and toCarol Labich for research assistance.  \n# A Call to ARMs:Adjustable RateMortgages in the 1980s\n\ndjustable rate mortgages,long-term loans that provide forinterest rate changes at regular intervals over their lifetimes,have recently become an important source of residential mort-gage financing in this country.Widely available for some years inAustralia,France,Great Britain,and West Germany,among others,adjustable rate mortgages became a viable option for U.S.borrowersnationwide only in the early 1980s.For the prior half-century,theUnited States relied almost exclusively on fixed-rate,long-term,level-payment mortgage instruments.  \nAttempts in 1971 and 1974 by the Federal Home Loan Bank Board(FHLBB)to authorize residential ARMs met with stiff resistance byCongress(Cassidy 1984).Opposition was widespread among consumergroups and labor unions,who feared borrowers would be subjected tounmanageable increases in their mortgage payments.By the end of the1970s,however,as the condition of the thrift industry rapidly deterio-rated,the political climate began to change(Guttentag 1984).In Decem-ber 1978 the FHLBB allowed federal savings and loan institutions inCalifornia to originate variable rate loans in competition with state-chartered institutions.This authority was expanded nationwide in 1979,but still with severe interest rate limitations.These limitations wereeased slightly in 1980 and in April 1981 the FHLBB substantially relaxedits restrictions on ARMs originated by thrifts.In March of 1981,theComptroller of the Currency authorized national banks to originateARMs for owner-occupied one-to four-family homes.  \nChart 1 shows the ARM share of residential mortgages originated inthe United States.By early 1982,the share had jumped to 40 percent oforiginations,and it rose as high as 68 percent in August 1984 and 69percent in December 1987.As the chart shows,however,the growthwas not uninterrupted.The share fell below 30 percent during four  \nmonths of 1983 and to 21 percent in June 1986.Theshare had again fallen to 21 percent by December1989.Nevertheless,the growth in originations led toan expanding stock of ARMs in lenders'portfolios.Whereas ARMs accounted for 9 percent of total homemortgage debt at the end of 1983(Nothaft 1984),bymid-1985 this share had risen to almost 20 percent(Goodman and Luckett 1985),and today this share isprobably close to 25 percent.  \nWhile ARMs have grown to be an importantfactor in mortgage lending,their variety and com-plexity have led to confusion.The purpose of thisarticle is to discuss the advantages and disadvantagesof ARMs to both lenders and borrowers,and tohighlight the nature of the risks involved.The articlethen explores the basic characteristics of ARMs andthe development of the ARM market in the 1980s.The evidence indicates that lenders have enthusiasti-cally embraced the ARM concept.Borrowers,on theother hand,have been reluctant,and this has forcedlenders to offer low initial interest rates and restric-tions on interest rate movements in order to sell theirproduct.  \n## I.The Attraction of ARMs for Lenders\n\nThe role of financial intermediaries is to improvethe efficiency of capital markets by linking those whosave and those who borrow.They perform thisintermediary service by converting their assets intoforms better suited to the preferences of their credi-tors in terms of denomination,liquidity,maturity,and risk characteristics.Traditionally,thrift institu-tions have done so by accepting deposits with rela-tively short terms that represented a safe,liquid assetfor savers,while providing long-term mortgages col-lateralized by long-lived residential structures.²  \nAn intermediary earns most of its income ascompensation for providing intermediary services.Thrifts have engaged in three types of i","cbCaik15rbqQMby0","https://ap.wps.com/l/cbCaik15rbqQMby0","pdf",4039164,"English","# A Call to ARMs: Adjustable Rate Mortgages in the 1980s\n## I. The Attraction of ARMs for Lenders","[{\"question\":\"What prompted the U.S. shift toward adjustable rate mortgages in the early 1980s?\",\"answer\":\"Regulatory and political changes eased restrictions on ARMs, allowing thrifts and then national banks to originate them for owner-occupied homes, making ARMs a viable nationwide option in the early 1980s.\"},{\"question\":\"How did the market share of ARMs change from 1982 through the late 1980s?\",\"answer\":\"The ARM share of residential mortgage originations jumped to about 40% by early 1982, peaked around 68–69% in 1984 and 1987, then fell below 30% during parts of 1983 and again declined to about 21% by June 1986 and December 1989.\"},{\"question\":\"Why were lenders attracted to ARMs while borrowers were more reluctant?\",\"answer\":\"Lenders embraced the ARM concept, while borrowers hesitated, leading lenders to use low initial interest rates and restrictions on interest-rate movements to improve sell-through.\"}]","A Call to ARMs: Adjustable Rate Mortgages in the 1980s | PDF",1791846734]