Did you hear the one about the mortgage banker option on the new BMW? No rear view mirrors.

Adjustable Rate Mortgages (ARMs) made up 40 percent of mortgages in the midst of the subprime lending spree. Surprisingly ARMs are staging a slow comeback since hitting their bottom of 3 percent in early 2009. New ARM home loans are back up to 10 percent, and Freddie Mac predicts it could reach 14 percent by year’s end.

Why, you ask. Record low mortgage rates bring more people into banks, and those people can show less debt-to-income ratio based on a 4% rate now than they could at 8% three years ago. But they can’t come up with the down payment – at least not right now. Enter, the ARM.

They’re calling these types of terms a “hybrid” ARM, which blends