Overview
- Mortgage Bankers Association data show ARMs near 13% of applications this fall, the highest share since 2008.
- Typical 5/1 ARM rates are in the mid-5% range versus roughly 6.3% for a 30-year fixed, yielding about $200 in monthly savings on a $400,000 loan.
- Lenders highlight 5-, 7-, and 10-year initial fixed periods, rate caps, and underwriting to fully indexed rates as key safeguards compared with pre-2008 ARMs.
- Borrower outcomes depend on the Federal Reserve’s future moves, with the potential for higher payments if expected rate cuts do not materialize before resets.
- Despite the uptick, ARM activity remains well below mid-2000s levels, and the CFPB urges borrowers to understand adjustment rules and cap structures.