Fixed rate vs variable in current environment

[Khurram Mirza]

A lot of newbie investors at the BRRR refinancing stage will have a tough time deciding whether to go with Variable vs Fixed rate mortgages due to Gov continuous rate hikes. Variable gives pre-payment flexibility and examined historically, variable rates have proven to be less expensive over time but history repeats itself until it doesn't. Would be interesting to know the thoughts of the BP community.

[Justin Fox]

I could see using an ARM product as a builder with inventory that couldn't be moved and getting out of 9-12% money, and then subsequently renting while hoping for better terms down the road.

I'm not in that position but I could see doing that to avoid financial pain in the short term.  People coming to the end of their 'dream-home' interim construction loans and faced with the reality that they're going to refinance into a 7+% fixed-rate loan instead of the ~3% they were anticipating, I think, Is going to be the bigger problem that no one is really talking about.  It's not only a question of affordability but if they even qualify at that point for the refi.  This will no doubt result in more ARMs being utilized to save $$.