Nearly 10% of mortgage borrowers chose riskier loans last week as rates topped 7%

Nearly 10% of mortgage borrowers opted for adjustable-rate mortgages (ARMs) last week, as average interest rates on fixed loans climbed above 7%, according to CNBC.

Adjustable-rate mortgages typically offer lower initial interest rates than traditional 30-year fixed loans, making them attractive to borrowers looking to reduce monthly payments in a higher-rate environment. However, the rate on an ARM can rise after an initial fixed period, exposing borrowers to potential payment increases later in the loan term.

The uptick in ARM applications reflects a broader trend of borrowers seeking ways to manage affordability as mortgage rates have risen in recent weeks. Housing market analysts have noted that when rates cross certain thresholds, more buyers turn to adjustable products despite the added long-term risk.

CNBC's report did not specify the exact share of ARM applications in prior weeks for comparison, though the shift underscores how sensitive homebuyer behavior is to changes in borrowing costs.

Higher mortgage rates have weighed on housing affordability across the US this year, with many prospective buyers and sellers adjusting their plans in response to the shifting rate environment.