Fixed Rates vs Adjustable Rate Mortgages

This morning Robert Shiller (co-creator of the Case/Shiller Housing Index) said that the 30 year fixed mortgage is “outdated.”  I am not a Yale professor but in this current environment I feel that anything but a fixed rate is too risky for most.  We have no idea where home prices will be and rates are at historic lows. 

Yes, adjustable rate mortgages are very attractive but what if you can’t sell your home once it starts adjusting?  Yes, there are caps on how much it can adjust on each adjustment period and a lifetime cap but I personally don’t think it is worth the risk right now.  The future is too unpredictable and interest rates are too low. 

I saw this conversation on CNBC this morning and they showed a breakdown of how the US has the largest percentage of fixed rate mortgages in the world but not the highest percentage of homeownership.  I understand that going with an ARM can lower the costs of owning a home but each borrower’s circumstances are different.