ARM loan rates
On Monday, December 05, 2022, the national average 5/1 ARM APR is 7.50%. The average 10/1 ARM APR is 6.96%, according to Bankrate's latest survey of the nation's largest mortgage lenders.
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Weekly national mortgage rate trends
Current mortgage rates
|30 year fixed||6.67%|
|15 year fixed||6.04%|
|10 year fixed||6.07%|
Today's national ARM loan rate trends
For today, Monday, December 05, 2022, the national average 5/1 ARM APR is 7.50%, up compared to last week’s of 7.49%. The national average 5/1 ARM refinance APR is 7.29%, up compared to last week’s of 7.29%.
Whether you're buying or refinancing, Bankrate often has offers well below the national average to help you finance your home for less. Compare rates here, then click "Next" to get started in finding your personalized quotes.
We’ve determined the national averages for mortgage and refinance rates from our most recent survey of the nation’s largest refinance lenders. Our own mortgage and refinance rates are calculated at the close of the business day, and include annual percentage rates and/or annual percentage yields. The rate averages tend to be volatile, and are intended to help consumers identify day-to-day movement.
Today's 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.
What is an ARM loan?
Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. As opposed to fixed-rate mortgages, the interest rate on an ARM changes periodically throughout the life of the loan. Since the rate on ARMs can change, your monthly payment may increase or decrease. ARMs are structured with a fixed-rate period and a floating-rate period. During the first few years your rate is fixed, but after that period ends, your rate becomes adjustable. These are typically 5/1 or 7/1 ARMs, which signify that the first five or seven years of the loan will have a fixed rate.
The time between rate changes — called the adjustment period — is in the fine print, so you’ll know exactly when it might go up or down. In most cases, ARM interest rates adjust on a yearly basis after the initial fixed period, but some ARMs are structured with six-month adjustments. You might see these advertised as a 5/6 ARM or 7/6 ARM, for example.
How do adjustable-rate mortgages work?
Adjustable-rate mortgages are loans with an interest rate that changes after an initial fixed period. The most common adjustable-rate mortgage, the 5/1 ARM, has a fixed period of five years at the start of the loan, which usually has a lower interest rate relative to market conditions. After that initial period ends, the /1 represents that the rate will adjust based on the prevailing market rate annually.
|30-year fixed-rate mortgage||5/1 ARM|
|Initial monthly payment||$1,831||$1,543|
*Notes: Interest rates as of June 15, 2022; monthly payments do not include insurance or taxes.
To see what the monthly payments would look like for your loan, check out Bankrate’s ARM or fixed-rate calculator.
Pros and cons of an ARM loan
As with most financial products, ARMs have their benefits and drawbacks. Here are the key things to know:
- It has lower rates and payments early in the loan term.
- Borrowers may be able to qualify for a larger mortgage thanks to lower initial payments.
- Borrowers may be able to invest their monthly savings.
- It offers a lower-cost option for borrowers who plan to move out of the house before the fixed period ends.
- Rates and payments can rise significantly over the life of the loan.
- Some annual caps don’t apply to the initial loan adjustment, so it may be difficult to swallow that first reset.
- These loans are more complex, so borrowers need to be more active and savvy in managing their accounts.
ARM loan FAQs
Refinancing into an ARM
If you want to refinance, you might consider refinancing into an ARM under the following circumstances:
- You’re going to sell your home in the next few years. Choose an ARM term strategically so that the adjustment period starts around your target sale date.
- You expect your income is going to rise. If so, you can take advantage of the lower rate during the initial period without the risk of being unable to afford the higher payment when the rate resets.
- Your top priority is getting a low interest rate today. An ARM might be worth it if you want the lowest rate possible during your first few years of the loan, but you should be comfortable with the likelihood that your payments will rise when the rate resets.
Refinancing into an ARM might not be a good move if any of the following apply to you:
- Your income isn’t stable. If you’re self-employed, for example, or your income fluctuates for another reason, you risk not being able to afford higher payments.
- You don’t expect to bring in more income. Before committing to an ARM, consider whether your income is likely to increase sufficiently by the time the rate resets.
- You won’t break even on refinance closing costs. Just like when you closed on your original mortgage, closing on your new loan will cost you in fees. The savings from a lower payment during the initial period might not outweigh the upfront cost, which can be as high as 5 percent of the amount that you’re refinancing.
Learn more about adjustable-rate mortgages
- Adjustable-rate mortgage resources
- ARM calculator
- ARM refinance rates
- Should you refinance your ARM into a fixed-rate mortgage?
Written by: Zach Wichter, mortgage reporter for Bankrate
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.
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