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Current 5/1 ARM rates

On Monday, April 15, 2024, the national average 5/1 ARM APR is 7.81%. The average 10/1 ARM APR is 7.93%, according to Bankrate's latest survey of the nation's ... largest mortgage lenders.

Today's 5/1 ARM loan rates

Lenders nationwide provide weekday mortgage rates to our comprehensive national survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of purchase loans. The interest rate table below is updated daily to give you the most current purchase rates when choosing a home loan. APRs and rates are based on no existing relationship or automatic payments. For these averages, the customer profile includes a 740 FICO score and a single-family residence. To learn more, see understanding Bankrate rate averages.

Product Interest Rate APR
5/1 ARM 6.58% 7.81%
7/1 ARM 6.92% 7.92%
10/1 ARM 7.26% 7.93%

Rates as of Monday, April 15, 2024 at 6:30 AM

 

During the introductory period, ARM rates are typically lower than their fixed-rate counterparts. The following table compares ARM rates to rates on other types of loans.

National mortgage rates by loan type

Product Interest Rate APR
5-1 ARM 6.58% 7.81%
30-Year Fixed Rate 7.05% 7.10%
15-Year Fixed Rate 6.54% 6.62%
30-Year Fixed Rate FHA 6.96% 7.01%
30-Year Fixed Rate VA 7.17% 7.21%
30-Year Fixed Rate Jumbo 7.21% 7.27%

Rates as of Monday, April 15, 2024 at 6:30 AM

 

 

What is 5/1 ARM and how does it work?

A 5/1 ARM is a 30-year, fully-amortizing mortgage with a low, fixed introductory rate for the first five years. After this fixed period, the rate becomes variable, changing once per year.

The variable rate is tied to a benchmark, typically the Secured Overnight Financing Rate (SOFR). This rate moves based on what’s happening in the economy in the U.S. and abroad, and how the Federal Reserve and other central banks are responding to those trends.

Along with the variable rate, ARMs have rate caps that limit how much the rate can change. These often include:

  • An initial rate cap: Limits how much the interest rate can change after the introductory period
  • A periodic rate cap: Limits how much the interest rate can change from one year to the next
  • A lifetime rate cap: Limits how much the interest rate can rise over the life of the loan
  • A payment cap: Limits the amount the monthly payment can rise over the life of the loan in dollars, rather than how much the rate can change in percentage points

Here’s an example of how the payments during the initial period of a 5/1 ARM differ from those with a 30-year fixed mortgage:

30-year fixed-rate mortgage 5/1 ARM
Loan principal $340,000 $340,000
Interest rate* 6.99% 6.13%
Initial monthly payment $2,259 $2,066

* Interest rates as of Jan. 23, 2024. Initial monthly payments do not include insurance or taxes.

The monthly payment on the ARM, however, will change after five years, either increasing or decreasing based on the new variable rate in the first adjustment.

Depending on your loan’s cap structure, your rate and payment could change significantly. One common cap arrangement: a 2/2/5 structure, in which the initial cap is 2 percentage points, the annual cap is 2 percentage points and the lifetime cap is 5 percentage points.

When is it a good idea to get a 5/1 ARM?

Consider your current financial situation and goals. Here are some scenarios where an ARM might be a good idea:

  • You can get a significantly lower APR on the ARM than with a fixed-rate mortgage
  • You plan to move or refinance before the initial rate period ends

There are positives and negatives when it comes to 5/1 ARMs, however. Let’s break down the pros and cons further:

Pros of a 5/1 ARM

  • Lower payments in the beginning: The lower introductory rate on a 5/1 ARM makes the loan more affordable, at least initially, which frees up room in your budget month to month.
  • Investment opportunity: You could take those monthly savings and invest, or put the funds toward another financial goal.
  • Significant savings if you plan to move: If you’re certain you’ll offload the mortgage before the fixed-rate period ends, you could save a bundle on interest.

Cons of a 5/1 ARM

  • Risk of higher rate: No one can predict how interest rates will move. Even with caps in place, your rate and payment could rise considerably over the life of the ARM.
  • More challenging to budget for: With a fixed-rate mortgage, you’ll have one set payment. With a 5/1 ARM, you’ll only have a set payment for five years. This can make future budgeting or financial planning much more difficult.

How to compare 5/1 ARM rates

When comparing 5/1 ARM loan offers, here are three key considerations:

  1. Interest rate and annual percentage rate (APR): The APR includes the interest rate and fees, both of which vary widely among lenders. Bankrate can help you shop for mortgage rates and receive tailored offers.
  2. ARM terms: Compare 5/1 ARM rates and estimated payments to those on a 3/1 ARM, 7/1 ARM and other ARM terms. The introductory rates are higher on longer-term ARMs, but the tradeoff is that the fixed-rate period lasts longer.
  3. Caps and other fine print: When comparing ARM loan offers, make sure you fully understand the rate caps and any other details about the structure and repayment of the loan.

Lender compare

Compare mortgage lenders side by side

Mortgage rates and fees can vary widely across lenders. To help you find the right one for your needs, use this tool to compare lenders based on a variety of factors. Bankrate has reviewed and partners with these lenders, and the two lenders shown first have the highest combined Bankrate Score and customer ratings. You can use the drop downs to explore beyond these lenders and find the best option for you.

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5/1 ARM loan FAQ