The Mortgage Banker's Association is reporting that 36% of mortgages last week used an adjustable rate, the highest rate ever for Adjustable Rate Mortgages, or ARMs.

Some economists worry that the use of adjustable rates could come back to haunt consumers, already stretched to make home purchases. However, as the cost of real estate has risen, so to has the use of adjustable rates, and the prospect of an increased rate of defaulted loans is anticipated by some market watchers.

Most ARMs usually offer a significantly lower rate than a typical 30-year, fixed-rate mortgage, but it is only fixed from 1 to 7 years. After that, the rate becomes variable, and could result in an ever-increasing rate of interest.

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