The Payment Shock Wave: How 2021-2023 ARM Borrowers Face $2,500 Monthly Increases (And What It Means for Greater Boston Real Estate)

Between 2021-2023, ARM market share surged from 3% to 15% as buyers used adjustable-rate mortgages to afford homes during the rate spike. Now these loans are resetting from 3-4% teaser rates to 7-8%, creating payment shocks of $1,200-$3,800/year for jumbo borrowers. This won't cause a 2008-style crash—these are prime borrowers with equity—but it's freezing market liquidity, suppressing home renovations, and creating localized distress in Florida condos and speculative markets like Austin.

ARM borrowers facing resets, potential homebuyers wondering about inventory, real estate investors evaluating opportunities, homeowners considering ARMs, agents tracking market dynamics, Greater Boston buyers assessing competition.

• •ARM market share jumped from 3% (2021) to 15% (2022-2023) as rates spiked to 7%+, creating large reset cohort
• •Payment shock calculation: $1.5M mortgage resetting from 3.75% to 7.75% = +$3,800/month (+$45,600/year)
• •Super-prime borrowers: ARM holders have 50% higher income, 733+ credit scores—NOT subprime like 2008
• •Rate caps (typically 2/2/5 or 5/2/5) limit immediate shock but spread pain over 12-18 months
• •Lock-in effect intensifies: 77% of mortgages below 6% means ARM reset victims still won't sell
• •Florida condo crisis: ARM resets + insurance spikes + condo reserve mandates = perfect storm
• •Greater Boston insulation: 58% cash transactions in Miami luxury, similar patterns in Boston $2M+ market
• •Renovation economy frozen: 71% of homeowners postponing projects due to payment shock absorption