Fixed-rate loans dominating market

Even though adjustable-rate mortgages generally start with a lower interest rate than fixed-rate loans, a report from Freddie Mac shows that people looking to buy Houston homes are generally staying away from them.

Freddie Mac economists studied all prime home purchase loans made from January 3 to 5, and found that adjustable-rate loans made up just 7 percent of the market - a significant drop from the 40 percent mark they reached before the recession.

Analysts said that even though adjustable-rate loans were a full percentage point lower, consumers were focused on being conservative and avoiding risk.

"The potential for much larger payments if future interest rates are significantly higher and the high delinquency rates borrowers have experienced on ARMs over the past couple of years have led consumers to prefer fixed-rate loans instead of ARMs," said Frank Nothaft, vice president and chief economist, Freddie Mac.

The high rate of ARMs in the past may also have played a role in the high number of foreclosures in recent years. According to RealtyTrac, nearly 3 million properties received foreclosure filings in 2010.