... Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward.
American homeowners clearly like the certainty of fixed mortgage payments. This preference is in striking contrast to the situation in some other countries, where adjustable-rate mortgages are far more common and where efforts to introduce American-type fixed-rate mortgages generally have not been successful. Fixed-rate mortgages seem unduly expensive to households in other countries. One possible reason is that these mortgages effectively charge homeowners high fees for protection against rising interest rates and for the right to refinance.
American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.
I never read the speech but do remember news reports of his speech. It was interpreted by the media as a recommendation.
Alan Greenspan Endorses ARMs 2/24/2004
Yesterday, in front of the Credit Union National Association, Alan Greenspan noted that "Many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade." While that doesn't mean that adjustable-rate mortgages (ARMs) are the right choice for everybody. Things to consider are savings vs. other term choices, the outlook on interest rates in 2007-2014, and the specific terms on each ARM.
You'll notice the headline makes that interpretation. There are many other examples.