The historically low interest rate policies of the Fed during 2002-2004 increased the demand for housing and the attractiveness of adjustable rate mortgages. This provided fuel for the soaring housing prices. ARM loans increased from 10 percent of total mortgages in 2000 to 21 percent in 2005. Fed policy pushed interest rates up in 2005-2006 and ARM loans were reset by EssayPlug | Jun 7, 2022 | the default and foreclosure rates on these loans soared for prime as well as subprime borrowers. pushing monthly payments higher. As a result