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'We all have our walls up': Here's what's different about the current housing market compared to 2008

Adjustable-Rate Mortgages were partially to blame for the recession. Since then, legislation and practices hope to make sure it doesn't happen again.

PHOENIX — More people are picking different options to help buy houses as mortgage rates skyrocket. 

More people have used adjustable mortgage rates for loans over the last month than at any time since the housing market collapsed 15 years ago.

The country has had historically low-interest rates for the past few years. There was no real benefit to getting an adjustable-rate mortgage when a more traditional 30-year fixed loan had low rates.

“As a result of interest rates increasing, people are looking for different options.” Matt LeDoux, a mortgage loan originator, said. “It all boils down to affordability.”

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Adjustable-rate mortgages usually offer a lower initial rate that is fixed for a certain amount of time. The rate can adjust depending on market conditions after that set period of time.

These adjustable rates coupled with bad lending practices caused the2008 housing market crash and the Great Recession.

“There were a lot of programs available back in 2008 that they did not have to document their income, they could state their income. There were interest-only options, so they were never paying that principle down.” LeDoux said. “Lending standards are completely different in 2022 than they were in 2008."

After the recession, Congress passed the Dodd-Frank Act which put more oversight and regulations on the industry. The act required lenders to make people show proof of income before getting a loan.

“They have worked to make sure people do have the ability to repay,” LeDoux said. “After going through what we went through in the housing crash, we all have our walls up. We are all aware this was a huge problem, but again we are doing things a lot differently this time.”

Matt Ledoux says another big difference in market conditions. He said demand is still very high in the Valley. Back before the recession, there was a greater chance of houses remaining vacant.

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