House Poor: Pumped Up Prices, Rising Rates, and Mortgages on Steroids: How to Survive the Coming Housing Crisis Consumers are moving away from adjustable-rate mortgages in droves as rates surge to levels not seen in over six years. Borrowing costs on 30-year fixed-rate mortgages dropped to the lowest level in weeks, but rates on one-year adjustable-rate mortgages (ARMs) surged to 6.51 percent from 5.84 percent in the week ended Aug. 24, its largest weekly jump on record and highest level since January 2001. A sharp rise in defaults in the subprime mortgage market has caused lenders to tighten requirements, making it difficult for those with weak credit to get a home loan. As lending standards continue to tighten up for those seeking to buy or refinance, it’s not surprising that there has been two straight weeks of declines in mortgage application activity.

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