As a result of the following change, the DTI is drastically increasing for ARM loans under the new General QM rule. For example, using the below the DTI increased from 38% to 45% which could cause an applicant to not qualify for the ARM loan.

"The qualifying rate for a 3/6-Month Secured Overnight Financing Rate (SOFR) ARM changed from the greater of the note
rate plus 2 percent or the fully indexed rate, to the note rate plus the life cap (5 percent)."

I am wondering if banks are making any product/other changes to account for this? We will clearly see fewer ARM loan approvals now; are banks making a counteroffer for a fixed rate product? I am struggling to determine how to proceed forward. Thanks for your feedback.

Not offer ARMs that adjust any sooner than 5 years? Plus, there is no more DTI thresholds - so why would they not qualify?