A risky mortgage instrument that helped spark the Great Financial Crisis is on the rise, but three things are different this time around.

Adjustable-rate mortgages (ARMs), once the villain of the subprime meltdown, are surging in popularity as homebuyers look for savings in a high-rate era. The share of ARMs reached nearly 13% of all mortgage applications this fall, per the Mortgage Bankers Association, the highest level since 2008.

For buyers today, the lure is clear: ARMs offer starting rates about a full percentage point lower than fixed-rate loans, making the difference between buying a home or staying sidelined. The typical 5/1 ARM has an interest rate in the mid-5% range, compared to the 30-year fixed rate’s 6.3% and above. On a $400,000 loan, that initial discount translates int

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