If you're wondering what's happening with mortgage rates today, here's the scoop: on September 27, 2025, the national average 5-year ARM (Adjustable-Rate Mortgage) rate dropped by 19 basis points, settling at 7.01%. This is a significant move, and in this article, I am going to delve into what it means for you, especially if you're considering buying a home or refinancing.

It's like this, imagine you are trying to decide what you should do next and you realize that the world of home finances is never straightforward but it can be rewarding if you pay close attention. I will try to make this easy for you.

Today’s Mortgage Rates: 5-Year ARM Sees Biggest Drop of 19 Basis Points – Sept 27, 2025

Here's a quick overview of what else happened in the mortgage market, according to Zillow's latest data:

• 30-Year Fixed Mortgage: Increased to 6.62%, up 2 basis points.
• 15-Year Fixed Mortgage: Decreased to 5.70%, down 5 basis points.
• 5-Year ARM Refinance: Decreased slightly to 7.41%, down 1 basis point.

ARM vs. Fixed: Is Now the Time to Switch Strategies?

With the 5-year ARM taking a noticeable dip, you might be wondering if it's time to reconsider your mortgage strategy. Let's compare ARMs and fixed-rate mortgages:

• Fixed-Rate Mortgages: These offer stability. The interest rate stays the same for the entire loan term (e.g., 15 years or 30 years). You like knowing what your monthly payment will be.
• Adjustable-Rate Mortgages (ARMs): Usually start with a lower interest rate than fixed-rate mortgages, but the rate can change periodically based on market conditions.

So, who benefits from an ARM?

ARMs can be attractive if:

• You plan to move or refinance within the initial fixed-rate period (in this case, 5 years).
• You believe interest rates will stay low or decrease in the future.
• I think you should consider your tolerance for risk. If you don't like uncertainty, a fixed-rate mortgage might be a better choice.

Why the Drop? Key Factors Behind the 5-Year ARM Rate Decline

The drop in the 5-year ARM rate is interesting. Here are some potential reasons:

• Anticipation of Future Rate Cuts: Lenders might be anticipating further rate cuts by the Federal Reserve, leading them to offer lower rates on ARMs now.
• Market Competition: Lenders are always trying to attract borrowers, and lowering ARM rates could be a way to stand out.
• Investor Demand: Increased demand for mortgage-backed securities tied to ARMs could also push rates down.

Here's a simplified analogy: Imagine a store having a sale on a certain item. They might lower the price to attract more customers, clear out inventory, or beat the competition. It's the same principle in the mortgage world.

The Federal Reserve’s Role in Mortgage Rates: Post-Cut Analysis & Outlook

The Federal Reserve (also known as The Fed) plays a huge role in influencing mortgage rates. Let me give you a lowdown.

The Decision: First Cut of 2025

On September 17, 2025, the Fed made its first move of the year to lower borrowing costs. They cut the benchmark interest rate by a quarter percentage point, bringing the target range down to 4.0% to 4.25%. This happened after they took a break for five meetings in 2025, subsequent to three cuts in late 2024.

Economic Context: Stubborn Inflation vs. Solid Growth

The Fed's decision was made due to mixed economic factors:

• Inflation: The core PCE price index (which the Fed watches closely) rose 2.9% year-over-year in August. This is still above their 2% target, and it's proving tricky to get it down.
• Economic Growth: Real GDP grew at a strong 3.8% annualized rate in the second quarter of 2025. This shows the economy is still pretty strong.

Here's a simplified table of the rates:

Mortgage Type	Rate on Sept 27, 2025	Change from Previous Day
30-Year Fixed	6.62%	Up 2 basis points
15-Year Fixed	5.70%	Down 5 basis points
5-Year ARM	7.01%	Down 19 basis points
5-Year ARM Refinance	7.41%	Down 1 basis point

The data shows that it's tough for the Fed to balance things out. They want to keep inflation in check but also want the economy to keep growing.

The Critical Link: Treasury Yields and Mortgage Rates

The Fed's rate cut affects mortgage rates indirectly through the 10-year U.S. Treasury yield. This yield is a key benchmark for 30-year fixed-rate mortgages.

• As of September 26, 2025, the 10-Year Treasury Yield was at 4.176%.

How It Works

1. Direct Benchmark: Lenders use the 10-year Treasury yield to price 30-year mortgages because homeowners typically hold their loans for about that long
2. Investor Competition: Mortgage-backed securities need to offer competitive returns compared to safe Treasury bonds to attract investors
3. The Spread: Mortgage rates are usually about 1 to 2 percentage points higher than the 10-year yield to account for the added risk. But recently, this spread has widened to over 2 percentage points. This has kept mortgage rates higher even when Treasury yields drop.

What This Means for Mortgage Rates Now

The rate cut has a moderating effect. While the 10-year Treasury yield has decreased, the persistently wide spread means that the decline in mortgage rates is not so massive. Mortgage rates haven't fallen as much as you might expect.

What could happen?

If the spread goes back to normal as market volatility decreases, we could see more significant declines in mortgage rates, possibly even below 6% in 2026.

But be careful! If inflation becomes a problem again (core PCE is at 2.9%), the Fed might have to stop cutting rates, which could push Treasury yields and mortgage rates back up.

Outlook for the Housing Market

What does it all mean for buying, selling, and refinancing?

• For Buyers: Even slightly lower mortgage rates can make homes more affordable. But because of the wide spread, the benefits aren't as big as they could be.
• For Sellers & Inventory: It might encourage homeowners who have been “rate-locked” to sell their homes, which could increase the number of homes on the market. But if new buyer demand is greater than the new listings, home prices could still be pushed higher.
• This is what I think, more people buying can mean prices go up. It is not a great situation for buyers.

Here is a summary table:

Group	Impact
Buyers	Modestly improved affordability, but high competition in limited-supply markets.
Sellers/Inventory	Potential increase in listings from “rate-locked” homeowners, but upward pressure on prices likely if demand outpaces listings.

What’s Next?

The Fed will continue to watch the data closely. Here’s what to keep an eye on:

• Inflation Reports: Watch for the next PCE and CPI readings. They'll show if inflation is really coming down.
• Labor Market Data: If job growth slows down, the Fed might consider another rate cut at their upcoming meetings.
• The Spread: Pay attention to whether the spread between Treasury yields and mortgage rates goes back to normal.

For people who are buying:

• It is more favorable than six months ago but the “spread” is a key factor in the rates being offered.

For people refinancing:

• Homeowners with rates over 6.5% should explore refinancing options because the opportunities have improved.

For market watchers:

• Lower rates will be gradual and it will be a slow journey. The wide spread indicates that lenders are pricing in risk and mortgage rates will remain elevated relative to Treasury yields for the foreseeable future.

Why This Matters for You

• Current Buyers: The market is a bit more favorable than it was six months ago. Make sure to shop around for the best rate, and keep an eye on that “spread.”
• Refinancers: If you have a mortgage rate above 6.5%, now might be a good time to explore refinancing options.
• Market Watchers: Keep an eye on inflation reports, labor market data, and the spread between Treasury yields and mortgage rates. This will give you the inside scoop on where rates are headed.

In my opinion, the recent dip in the 5-year ARM rate is a notable event, but it's important to understand the bigger picture. Factors like the Federal Reserve's policies, inflation, and the spread between Treasury yields and mortgage rates all play a role. Whether you're a buyer, seller, or homeowner looking to refinance, staying informed and understanding these dynamics can help you make the most of your financial decisions.

Good news for those considering an Adjustable-Rate Mortgage (ARM)! According to Zillow, as of September 3, 2025, the national average 5-year ARM mortgage rate has decreased by 3 basis points, bringing it down to 6.88%. This slight dip could be an opportunity to explore financing options, especially if you anticipate interest rate changes in the near future. Let's get into the details and understand what this means for you.

Today’s 5-Year Adjustable Mortgage Rate Goes Down by 3 Basis Points – Sept 3, 2025

Why This Matters: Understanding ARMs and the Current Market

If you're like most people, the world of mortgages can feel like navigating a maze. So, before we dive deeper into this specific rate change, let's quickly recap what an Adjustable-Rate Mortgage (ARM) is. Unlike a fixed-rate mortgage where your interest rate stays the same for the entire loan term, an ARM has an interest rate that adjusts periodically based on market conditions.

The most common type of ARM is the 5-year ARM. This means your initial interest rate stays fixed for five years. After that, the rate adjusts annually (or more frequently, depending on the loan terms) based on a benchmark index plus a margin. ARMs can be a good option if you plan to move or refinance before the adjustment period begins. Or, simply just believe rates will go down in the future.

Why is this important now? Because the Federal Reserve's monetary policy decisions greatly influence mortgage rates. In recent years, we've seen a lot of fluctuation, so understanding the bigger picture is key. The announcement of even a small decrease in rates like today's 3 basis points drop in 5-year ARM can be an indicator of prevailing monetary policy.

A Detailed Look at Today's Mortgage Rate Changes

Here's a snapshot of how various mortgage rates are trending as of today, September 3, 2025:

• 30-Year Fixed Rate: 6.58% (Down 1 basis point)
• 15-Year Fixed Rate: 5.70% (Up 2 basis points)
• 5-Year ARM: 6.88% (Down 3 basis points)

Here's a comparative table with additional data:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.58 %	Down 0.01%	6.95 %	Down 0.08%
20-Year Fixed Rate	6.28 %	Down 0.15%	6.56 %	Down 0.29%
15-Year Fixed Rate	5.70 %	Up 0.05%	5.94 %	Down 0.01%
10-Year Fixed Rate	5.79 %	0.00 %	6.09 %	0.00 %
7-year ARM	7.08 %	Up 0.03%	7.60 %	Down 0.10%
5-year ARM	6.88 %	0.00 %	7.51 %	Down 0.08%
3-year ARM	—	0.00 %	—	0.00 %

Source: Zillow

Why the Focus on ARMs?

While the 30-year fixed mortgage is a longtime staple, ARMs definitely deserve a spot in the conversation, especially when the interest rate climate is set to get better. Here's why:

• Lower Initial Rate: ARMs often start with a lower interest rate compared to fixed-rate mortgages. This can mean lower monthly payments in the initial years, freeing up cash for other financial goals.
• Potential for Savings: If interest rates fall during the initial fixed-rate period, you benefit when the rate adjusts.
• Flexibility: As mentioned earlier, ARMs can be great if you don't plan to stay in your home long-term. You can take advantage of the lower initial rate without worrying too much about future adjustments.

The Fed's Influence: What's Been Happening

To really understand these rate changes, we need to talk about the Federal Reserve. The Fed plays a huge role in setting the tone for mortgage rates through its monetary policy decisions.

• Pandemic Response: During the pandemic, the Fed bought bonds to keep interest rates low, making mortgages incredibly affordable.
• Inflation Battle: As inflation surged, the Fed aggressively raised the federal funds rate, sending mortgage rates soaring to 20-year highs by mid-2023.
• The Pause and the Pivot: After a period of holding steady, the Fed started cutting rates in late 2024 to offset economic headwinds.

Currently, the Fed has held rates steady through the first half of 2025, with some internal debate about the best course of action. But market sentiment strongly suggests that another rate cut is highly likely at the upcoming September meeting.

What the Market is Signaling

The market is buzzing with anticipation of a Fed rate cut. Factors like cooling inflation and a slightly weakening labor market are fueling these expectations. This anticipation is reflected in the bond market:

• 2-Year Treasury Yield: Around 3.63% (sensitive to Fed expectations)
• 10-Year Treasury Yield: Around 4.23% (a benchmark for mortgages)
• 30-Year Treasury Yield: Around 4.89%

The yield curve is also normalizing, indicating that markets are pricing in future rate cuts. All eyes are now on Fed Chair Jerome Powell for confirmation of this expectation.

How This Impacts You: Buyers, Refinancers, and Investors

So, what does today's news and the broader economic backdrop mean for you?

• Current Buyers: If you're in the market to buy a home, rates are still relatively high, but the expected September rate cut offers a glimmer of hope for more affordable borrowing costs.
• Refinancers: If you have a mortgage with a rate above 7%, keep a close watch on the September meeting. A rate cut could open up a new window for refinancing.
• Investors: The bond market is already pricing in future rate cuts. A confirmed cut could solidify this trend and push yields lower, impacting bond values.

Looking Ahead: Key Dates and Possible Scenarios

Here are some critical dates to mark on your calendar:

• September 16-17 Meeting: The next Fed meeting where a rate cut is widely expected.
• December Meeting: Another potential opportunity for the Fed to further ease monetary policy.

The long-term outlook suggests that the Fed anticipates gradually easing rates, with potential for rates to settle near 2.25%-2.5% by 2027.

The Takeaway

While today's 3 basis point drop in the 5-year ARM is relatively small, it is an indication of the existing shift in monetary policy. With a Fed rate cut likely on the horizon and the overall economy showing signs of cooling, we could be entering a more favorable environment for borrowers in the coming months. So, take the time to evaluate your own financial situation and consider if an adjustable-rate mortgage is the right move for you.

Good news for prospective homebuyers! Today's 5-year adjustable mortgage rate has dropped a notable 13 basis points to 6.77% on August 28, 2025, according to the latest data from Zillow. But what does this dip mean for you, and why should you even care about ARMs (Adjustable Rate Mortgages) in the first place? Let's dive in.

Today's 5-Year Adjustable Mortgage Rate Goes Down by 13 Basis Points – August 28, 2025

Why Should You Pay Attention to ARMs?

Let's be real, mortgages can feel like navigating a maze. With all the different loan types and fluctuating rates, it's easy to get lost. But understanding ARMs, even if you ultimately choose a fixed-rate mortgage, can give you a competitive edge.

Think of an ARM like this: it starts with a lower interest rate for a set period (in this case, 5 years), giving you a break on your monthly payments upfront. After that initial period, the rate adjusts based on current market conditions.

For some people, this is a great option:

• Short-Term Homeowners: If you know you won't be in the house for more than 5 years, you can benefit from the lower initial rate and then sell before it adjusts.
• Optimists: If you believe interest rates will go down in the future, you can gamble that your rate will decrease after the adjustment period.
• Cash Flow Conscious: With all the other expenses in one's life, you'd need lower monthly payments to begin with.

Breaking Down Today's Mortgage Rate News

Here's a quick overview of how mortgage rates are trending right now, according to Zillow's latest report:

• 30-Year Fixed: 6.52% (down 5 basis points)
• 15-Year Fixed: 5.58% (down 7 basis points)
• 5-Year ARM: 6.77% (down 13 basis points)

Here’s a detailed view of the rates

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.52 %	down0.15 %	6.94 %	down0.18 %
20-Year Fixed Rate	6.43 %	0.00 %	6.94 %	up0.03 %
15-Year Fixed Rate	5.58 %	down0.19 %	5.86 %	down0.21 %
10-Year Fixed Rate	5.79 %	0.00 %	6.09 %	0.00 %
7-year ARM	6.63 %	down0.57 %	7.59 %	down0.16 %
5-year ARM	6.77 %	down0.37 %	7.49 %	down0.24 %
3-year ARM	–	0.00 %	–	0.00 %

What's Causing These Rate Changes? The Fed's Game Plan

The biggest influence on these shifts is the Federal Reserve (the Fed). Their decisions on monetary policy directly impact mortgage rates. They do not control the rate but their actions have a large impact and this is why we hear the news so often discussing the Fed. Remember that whole pandemic thing? The Fed worked hard to keep rates low, but then inflation hit. So, from March 2022 to July 2023 the Fed raised the federal funds rate aggressively by 5.25 percentage points to fight inflation, in turn, making mortgage rates reach highs. Starting in September 2024, the Fed began to cut rates three times but has held rates steady in 2025.

Looking ahead, the market is anticipating a rate cut in September 2025. A recent poll shows that there is an 85-95% chance of a cut at the next meeting on September 16-17, according to the CME FedWatch Tool. The Fed has to consider many things, with inflation at around 2.7%, rising unemployment and cooling job growth. It is also worth noting that the Fed does not always agree at the meetings. During the July 30th meeting, two governors voted for a cut immediately.

If the September cut happens as expected, experts are suggesting, this could lower borrowing costs, cause spur business investment, and create significant movements in the stock and bond markets.

Why This Matters to You: ARMs in the Current Market

Even with the recent dip, 5-year ARM rates are still at 6.77%.

• Current Buyers: Pay close attention to the Fed's next move. The anticipated September cut could finally start a sustained downward trend in borrowing costs, meaning you might get a better rate soon.
• Refinancers: If you're locked into a rate above 7%, now is the time to keep a close eye on the September Fed meeting. A rate cut could open up a wave of refinancing opportunities.

My Take on the ARM Landscape

While ARMs can be tempting with their lower initial rates, it's crucial to do your homework. You could get caught off guard if rates rise sharply after the initial fixed-rate period. That being said, if you plan to sell or refinance within that 5-year window, an ARM might be a smart move. It all comes down to your individual financial situation and risk tolerance. Before making any decisions, consult with a qualified mortgage professional who can help you weigh the pros and cons of an ARM versus a fixed-rate mortgage.

Stay Informed: The world of mortgage rates is constantly changing.

If you've been watching mortgage rates like a hawk, waiting for the right moment to buy or refinance, you're in luck! As of August 27, 2025, we're seeing a significant drop in mortgage rates across the board. National 30-year fixed mortgage rates are down to 6.59%, marking a notable shift compared to recent weeks. This decline affects not only fixed rates but also refinance rates and Adjustable-Rate Mortgages (ARMs), making it potentially a great time to reconsider your options.

I know, I know – the mortgage market can feel like a rollercoaster. For most of 2025, rates have been stubbornly stuck between 6.6% and 6.8%. But these recent changes could signal a real shift, and that’s something worth diving into.

Mortgage Rates Plummet August 27, 2025: Big Drop in Fixed Rates, Refinance Rates, Current ARMs

What's Causing This Dip in Mortgage Rates?

The fall in mortgage rates isn't happening in a vacuum. It is a result of a couple of key interconnected factors.

• Weak Job Growth: Recent hiring data released early in August revealed surprisingly weak job growth numbers. This suggests the economy might be cooling off.
• Inflation Concerns, But Not as Bad as Feared: While inflation remains a concern, July's data showed inflation was still sticky, but below economist’s expectations.
• Federal Reserve Anticipation: Most importantly, these two items have led traders to strongly believe the Federal Reserve will cut interest rates by 25 basis points next month, with estimates from the CME FedWatch tool reporting an 89% chance of a rate cut in September. A 91% chance of the Fed dropping interest rates by 25 basis points next month was speculated. That's huge! This anticipation alone is putting downward pressure on mortgage rates NOW.

A Closer Look at Today's Mortgage Rates (August 27, 2025)

Let's break down exactly what's happening with different types of mortgage rates. Here's a comparison of current rates versus last week, based on Zillow's report:

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.59%	down 0.08%	7.08%	down 0.03%
20-Year Fixed Rate	6.43%	0.00%	6.94%	up 0.03%
15-Year Fixed Rate	5.65%	down 0.12%	5.98%	down 0.08%
10-Year Fixed Rate	5.79%	0.00%	6.09%	0.00%
7-year ARM	6.63%	down 0.57%	7.59%	down 0.16%
5-year ARM	6.74%	down 0.39%	7.53%	down 0.20%
3-year ARM	—	0.00%	—	0.00%

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.75%	up 0.73%	7.78%	up 0.75%
30-Year Fixed Rate VA	5.91%	down 0.30%	5.99%	down 0.43%
15-Year Fixed Rate FHA	5.25%	down 0.30%	6.21%	down 0.30%
15-Year Fixed Rate VA	5.54%	down 0.30%	5.68%	down 0.52%

Refinance Rates See a Plunge Too!

Refinancing your mortgage can be a great way to save money each month, and the dip in rates definitely makes it worth considering. National 30-year fixed refinance rates are down to 6.75%, a noticeable decrease.

What About the Future? Mortgage Rate Forecasts for Late 2025 and Beyond

No one has a crystal ball, but leading experts are constantly analyzing the market to make informed predictions. Here's what some of the big players are saying:

• National Association of REALTORS®: Expects mortgage rates to average 6.4% in the second half of 2025 and potentially dip to 6.1% in 2026.
• Realtor.com: Predicts a gradual easing of rates to around 6.4% by the end of the year.
• Fannie Mae: Anticipates mortgage rates will end 2025 at 6.5 percent and 2026 at 6.1 percent. They also expect a rise in mortgage originations to $1.85 trillion in 2025 and $2.26 trillion in 2026.
• Mortgage Bankers Association: Foresees rates remaining mostly unchanged near 6.8% through September 2025, and then settling in the mid-6% range (6.4%-6.6%) for the rest of the year.

My Take: Don't Try to Time the Market Perfectly

While this news is encouraging, remember that trying to perfectly time the market is almost impossible. A lot of people expected mortgage rates to fall over the last year, but the opposite happened. Buy a house or refinance when it makes the most sense for your individual financial situation. Don't get caught up in trying to chase the absolute lowest rate. Focus on affordability and long-term financial stability.

The Federal Reserve's Role: The Real Power Behind the Curtain

The Federal Reserve (also called simply, the Fed) remains the main driver of mortgage rates through its monetary policies. It is worth knowing how they function:

• Pandemic Recovery to Rate Hike Cycle (2021-2023): The Fed’s bond purchases kept mortgage rates historically low until late 2021. Then to combat inflation, the Fed aggressively increased the federal funds rate, pushing mortgages to 20-year highs.
• The Pivot to Cuts (Late 2024): After holding rates steady for 14 months, the Fed cut rates three times in late 2024 (September to December), reducing the federal funds rate by 1 percentage point to 4.25%-4.5%.
• 2025: A Year of Waiting and Anticipation: Through July 30, 2025, the Fed held rates steady for five consecutive meetings. Growing economic headwinds suggest a high probability of a September cut. This is based on cooling inflation, weakening labor market, and predicted slowdowns.

Of all the forecasts, the most crucial one is Fed Chair Jerome Powell's speech at the Jackson Hole Economic Symposium on August 22. While he continues to emphasize data dependency, his tone will be scrutinized for confirmation of the market's overwhelming expectation. The bottom line is: all eyes will be on Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Economic Symposium on August 22 for any final hints on the Fed's September decision.

So, What Does This All Mean For You?

• Current Homebuyers: This dip provides some relief, but don't expect rates to plummet overnight. Focus on finding a home you love and a mortgage you can comfortably afford.
• Potential Refinancers: If your current mortgage rate is significantly higher than these new rates, now is the time to seriously explore refinancing. Do the math and see if it makes sense for your long-term financial goals.
• The September Fed Watch: Closely monitor the September meeting that could signal a new wave of refinancing opportunities. Unexpected persistence in inflation or surprising economic strength between now and September could still alter the committee's calculus.

In Closing

The recent drop in mortgage rates is definitely welcome news for anyone in the market to buy or refinance. If the market continues to stay in this range, it signals we could be looking at lower rates by the end of the year.

While most of the headlines you'll see today will focus on the slight uptick in the popular 30-year fixed mortgage, the real story is happening with adjustable-rate loans. For mortgage rates today, the 5-year ARM plunges by 23 basis points – August 21, 2025, bringing the national average rate down to a compelling 7.09%.

This significant drop comes as the average 30-year fixed rate nudged up by 4 basis points to 6.76%, creating a fascinating split in the market that savvy homebuyers should be watching closely. It’s a clear signal that the market is beginning to price in some long-awaited relief from the Federal Reserve.

Mortgage Rates Today: 5-Year Adjustable Rate Plunges by 23 Basis Points – August 21, 2025

In my years of watching the mortgage market, I've learned that you have to look beyond the headlines. The 30-year fixed rate is the king, no doubt. It’s stable, predictable, and what most Americans use to buy a home. But it's often a slow-moving giant. Adjustable-Rate Mortgages (ARMs), on the other hand, are like speedboats—they react much faster to the changing tides of economic expectation.

Today’s 23-basis-point drop in the 5-year ARM is a perfect example. A basis point is simply one-hundredth of a percentage point, so we're talking about a drop of 0.23%. While that might not sound like a lot, in the world of mortgages, it's a significant one-day move.

So, why the sudden dip? It’s all about anticipation. The market is overwhelmingly confident that the Federal Reserve is gearing up to cut its benchmark interest rate at its meeting next month. While fixed-rate mortgages are more closely tied to the long-term outlook of the economy (and the 10-year Treasury yield), ARMs are much more sensitive to short-term interest rate policy. Lenders are essentially betting on a lower-rate environment in the near future, and they are starting to price that optimism into their ARM products today.

A Quick Refresher: How Does an ARM Work?

If you’re not familiar with ARMs, they can seem a bit complicated, but the concept is straightforward. I always break it down for my clients like this:

• The Introductory Period: An ARM, like a 5-year ARM, has a fixed interest rate for an initial period (in this case, five years). Your payment won't change during this time.
• The Adjustment Period: After the intro period ends, the rate “adjusts” based on a specific financial index plus a margin set by the lender. This usually happens once a year.
• The Appeal: The initial rate on an ARM is often lower than on a 30-year fixed mortgage, which can mean a lower monthly payment for the first few years.

The drop we're seeing today makes that initial rate even more attractive, especially for certain types of buyers.

A Look at the Full Rate Board for August 21, 2025

While the ARM story is the most dynamic, let's take a look at the full picture. The 30-year fixed rate remains stubbornly high, and even the 15-year fixed rate is holding steady. This creates a “sticky” situation for many buyers who crave long-term predictability.

Here’s a snapshot of the national average rates for conforming loans today:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.76%	up 0.09%	7.17%	up 0.04%
20-Year Fixed Rate	6.43%	down 0.24%	6.90%	down 0.08%
15-Year Fixed Rate	5.80%	up 0.04%	6.04%	down 0.03%
10-Year Fixed Rate	5.79%	up 0.31%	6.09%	up 0.25%
7-year ARM	7.13%	down 0.40%	7.60%	down 0.40%
5-year ARM	7.09%	down 0.15%	7.63%	down 0.18%

Data by Zillow. Last updated: 8/21/2025.

The standout numbers here are the drops in the 5-year and 7-year ARMs. It tells a clear story: the market is confident that rates will be lower in the medium term, even if the long-term outlook keeping 30-year rates high remains a bit cloudy.

The Elephant in the Room: What is the Federal Reserve Doing?

To understand why rates are behaving this way, we have to talk about the Federal Reserve. Their decisions cast a long shadow over the entire economy, and especially over the housing market.

The Great Pause of 2025

Remember the whirlwind of 2022 and 2023? The Fed went on a historic rate-hiking spree to crush runaway inflation. It worked, but it also sent mortgage rates soaring to two-decade highs. Then, in late 2024, they pivoted, delivering three quick rate cuts to steady the ship.

Since then, however, it's been a waiting game. We've gone through five straight Fed meetings in 2025 with no change. Why? The Fed has been walking a tightrope. On one side, you have slowing GDP growth and a cooling labor market (unemployment is now at 4.2%). On the other, you have stubborn inflation that just won't quite get back to their 2% target. It's been hovering around 2.7%, complicated by new tariff pressures.

Inside the Fed, there's even been some disagreement. At the last meeting in July, two governors actually voted for a rate cut, a sign that the pressure to act is building.

All Eyes on September

Now, it looks like the wait is almost over. All signs are pointing to a rate cut at the Fed's next meeting on September 16-17. Market indicators like the CME FedWatch Tool are showing an 85-95% probability of a cut.

Here’s why the market is so confident:

1. Cooling Inflation: The latest Consumer Price Index (CPI) reading showed inflation moderating to 2.7%. It's not perfect, but it's moving in the right direction.
2. Weakening Labor Market: The rise in unemployment gives the Fed the justification it needs to act to support the economy without worrying as much about overheating it.
3. Economic Forecasts: Projections point to a continued economic slowdown, making a preemptive cut a prudent move.

Fed Chair Jerome Powell is speaking tomorrow at the Jackson Hole symposium, and you can bet everyone will be hanging on his every word for a final clue.

The Million-Dollar Question: Should You Consider an ARM Right Now?

This is where my experience as a market observer comes in handy. The data tells us what is happening, but the real question is what it means for you. An ARM isn't for everyone, but in this specific environment, it's becoming a very strategic tool for the right buyer.

Who Should Consider an ARM?

I typically see this work well for a few types of homebuyers:

• The Short-Term Homeowner: If you know you're likely to move or sell the property in five to seven years (perhaps for a job relocation or to upsize for a growing family), an ARM is a fantastic option. You can enjoy the lower initial rate and sell the home before the first rate adjustment ever hits.
• The High-Income Earner Expecting a Raise: If you are confident your income will rise significantly in the coming years, you may be comfortable with the risk of a higher payment down the line, knowing you can absorb it or refinance.
• The Strategic Refinancer: A buyer might take a 5-year ARM today with the explicit plan to refinance into a fixed-rate loan in a year or two, once the Fed's rate cuts have fully filtered through the system and brought 30-year fixed rates down. Today's ARM drop is a bet on that exact scenario.

Who Should Stick with a Fixed-Rate Mortgage?

Despite the allure of a lower ARM rate, the peace of mind of a fixed-rate loan is unbeatable for many. You should probably stick with a fixed rate if:

• You're on a Tight Budget: If the thought of your monthly payment potentially increasing in five years makes you nervous, an ARM is not for you. Predictability is key.
• You Plan to Stay in Your Home for the Long Haul: If this is your “forever home,” locking in a rate for 30 years eliminates all future interest rate risk. You'll never have to worry about what the Fed is doing again.
• You are Risk-Averse: Some people just sleep better at night knowing their largest monthly expense will never change. There's absolutely nothing wrong with that!

Key Dates for Your Calendar

The next few weeks will be pivotal. Here’s what I’m watching:

• August 22: Fed Chair Powell's speech at Jackson Hole.
• September 16-17: The next Fed meeting, where a rate cut is highly anticipated.
• December Meeting: The likely opportunity for a second rate cut in 2025.

My Final Thoughts

Today’s mortgage rate news is a tale of two markets. The fixed-rate world is still stuck in the mud, waiting for a clear signal. But the adjustable-rate market is already sprinting ahead, anticipating the relief that seems to be just around the corner.

The 23-basis-point plunge in the 5-year ARM is more than just a number; it’s a strategic opportunity for the right buyer. It’s a chance to get a lower payment now while positioning yourself to refinance into a great fixed rate later. As always, the key is to understand your own financial situation, your timeline, and your tolerance for risk. The door on ARMs just opened a little wider—it’s worth taking a look inside.

If you are in the market for a new home or looking to refinance, understanding the current mortgage rate is very important. As of today, August 19, 2025, the national average 5-year ARM (Adjustable-Rate Mortgage) has decreased by 6 basis points, settling at 7.27%, according to data from Zillow. While this might seem like a small change, it signals shifts in the market that I will discuss in this article. Let's break down what it means for you and how the Federal Reserve's decisions are playing a significant role.

Mortgage Rates Today: 5-Year ARM Goes Down by 6 Basis Points – August 19, 2025

A Snapshot of Today's Mortgage Rates

First, here’s a quick overview of how different mortgage types are performing right now:

• 30-Year Fixed: 6.69% (down 1 basis point from yesterday)
• 15-Year Fixed: 5.79% (down 2 basis point from yesterday)
• 5-Year ARM: 7.27% (down 6 basis points from yesterday)

Here’s a more detailed look at the conforming loan rates:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.69 %	up0.03 %	7.16 %	up0.04 %
20-Year Fixed Rate	6.43 %	down0.24 %	6.90 %	down0.08 %
15-Year Fixed Rate	5.79 %	up0.02 %	6.09 %	up0.02 %
10-Year Fixed Rate	5.48 %	0.00 %	5.84 %	0.00 %
7-year ARM	7.45 %	down0.08 %	8.12 %	up0.12 %
5-year ARM	7.27 %	up0.03 %	7.82 %	up0.01 %
3-year ARM	—	0.00 %	—	0.00 %

Source: Zillow – August 19, 2025

Why Focus on ARMs?

Adjustable-Rate Mortgages (ARMs) can be appealing, especially when rates for fixed mortgages are high. The initial rate on an ARM is often lower than a fixed-rate mortgage. In today's market, where the 30-year fixed rate sits at 6.69%, a 5-year ARM at 7.27% may not seem like a deal initially, but understanding the broader economic context is crucial.

The reason I believe ARM rates are really important right now: They directly reflect market expectations about near-term interest rate movements, influenced so much by meetings of the Fed. The small decrease we're seeing today could hint at bigger changes on the horizon.

The Federal Reserve's Influence: A Deep Dive

To really understand where mortgage rates are headed, we need to talk about the Federal Reserve (the Fed). Their monetary policy decisions are what mainly drive the trends in these rates.

From 2021 to 2023, the Fed was in full response mode, with actions varying from keeping mortgage rates at historic lows during the pandemic by purchasing bonds, to then switching gears and combatting inflation and aggressively raising the federal funds rate by 5.25 percentage points.

In late 2024, the Fed started to pivot, cutting rates three times between September and December. This decrease was one percentage point, putting the federal funds rate between 4.25% and 4.5%. Since those end of 2024 cuts, we've had a pause through July 2025, while they took additional measures to consider the economic impact of these decisions.

Economic Factors at Play in 2025

As of today, August 19, 2025, we're seeing a mix of economic factors that are influencing the Fed's decisions:

• Inflation is Stubborn: Core PCE (Personal Consumption Expenditures) remains around 2.7%, and new tariffs could add to the pressure.
• Growth is Slowing: GDP growth has slowed down, and unemployment has increased to 4.2%. We're also seeing fewer new jobs being created.

Because of these factors, there's a ton of expectation that the Fed will cut rates at their upcoming September 16-17 meeting. You can see the market signals point to a high probability (85-95%) of this happening, based on tools like the CME FedWatch Tool.

Why a September Rate Cut Is Likely

There are three things I think are really pointing toward the Fed making a rate cut next month:

• Cooling Inflation: The CPI (Consumer Price Index) has come down to 2.7%, which is getting closer to the Fed's target.
• Labor Market Weakening: With unemployment at 4.2% and fewer new jobs, the Fed has reason to step in and support the economy.
• Predicted Slowdown: Economic forecasts are suggesting a slowdown, which just makes a preemptive stimulus look more necessary.

Keep an eye out for Fed Chair Jerome Powell's speech at the Jackson Hole Economic Symposium on August 22. He's likely to drop more hints about what the Fed will do in September.

How a Rate Cut Will Impact Mortgage Rates

The mortgage rates on 30-year fixed mortgages has hovered close to 6.8% through mid-2025. A cut in September is expected to push rates lower. I believe this will reduce borrowing costs across the board, encouraging business investment and leading to significant movements in both stock and bond markets.

The Fed's own projections from June suggested two rate cuts in 2025. And with a September cut, it could potentially bring mortgage rates down near 6% by the end of the year.

What to Watch Out For

Even though the probability is high, it's important to remember that the Fed's decision isn't guaranteed. If inflation stays higher than expected or the economy shows surprising strength, things could change.

Key Dates and Scenarios

Here are some important dates to keep in mind:

• September 16-17 Meeting: This is when the Fed will likely make a rate cut. They'll also release updated economic forecasts.
• December Meeting: This could be when the Fed makes its second rate cut of 2025.

Looking further ahead, the Fed anticipates slowly lowering rates, with the goal of getting them to around 2.25%-2.5% by 2027.

What This Means for You

Here’s how these trends might affect different people:

• Current Buyers: Although rates are still high, keep an eye on the September meeting. It could bring some relief.
• Refinancers: If your rate is above 7%, pay close attention to what happens in September. You might be able to refinance at a lower rate.
• Investors: The bond markets are sensitive to what the Fed says and does. If there's a confirmed rate cut, bond yields will likely go down.

Final Thoughts: The small decrease in the 5-year ARM rate today is just one piece of a much larger puzzle. By keeping an eye on the Fed's actions and understanding the economic factors at play, you can make smarter decisions about your mortgage and financial future.

As of today, August 16, 2025, the national average 5-year ARM (Adjustable-Rate Mortgage) rate has risen by 3 basis points to 7.26%. Let's dive into what this means for you, whether you're a potential homebuyer, a seasoned homeowner looking to refinance, or just curious about the ever-shifting world of mortgage finance.

Mortgage Rates Today: 5-Year ARM Jumps by 3 Basis Points – August 16, 2025

Understanding Today's Mortgage Rate Snapshot

Mortgage rates are anything but static. They dance to the tune of the economy, reacting to everything from inflation reports to Federal Reserve decisions. Here's a quick overview of where things stand today, courtesy of Zillow data:

• 30-Year Fixed Rate: 6.67% (down 1 basis point from last week)
• 15-Year Fixed Rate: 5.79% (up 4 basis points from last week)
• 5-Year ARM: 7.26% (up 3 basis points from last week)

To give you a complete picture, here’s a table summarizing the rates:

Program	Rate	1W Change	APR	1W Change
30-Year Fixed Rate	6.67%	down 0.01%	7.14%	up 0.01%
20-Year Fixed Rate	6.37%	down 0.10%	6.88%	0.00%
15-Year Fixed Rate	5.79%	up 0.04%	6.09%	up 0.04%
10-Year Fixed Rate	5.48%	0.00%	5.84%	0.00%
7-Year ARM	7.30%	up 0.21%	8.06%	up 0.47%
5-Year ARM	7.26%	up 0.03%	7.83%	up 0.05%
3-Year ARM	—	0.00%	—	0.00%

Why the Focus on the 5-Year ARM?

Now, you might be wondering why we're zeroing in on the 5-year ARM. While the 30-year fixed rate is the go-to mortgage for many, ARMs offer a different kind of opportunity – and risk. As the name suggests, during the initial fixed-rate period (in this case, five years), your interest rate stays the same. After that, it adjusts periodically based on a benchmark index (like the SOFR plus a margin agreed upon at the inception of the agreement).

For example, if you plan to move or upgrade within five years, or expect interest rates to fall in the near future, an ARM might seem enticing. You could potentially snag a lower initial rate than a fixed-rate mortgage. But there is always an element of risk as the rates may go up after that fixed period term gets over.

Diving Deeper: The Federal Reserve's Role

Mortgage rates don't just pop up out of nowhere. They're heavily influenced by the Federal Reserve (the Fed), and understanding the Fed's moves is crucial to predicting where rates are headed, as well as to understand today's mortgage rates.

• Pandemic Era: In 2021-2023 – The Fed kept rates super low to help the economy recover from the pandemic.
• Struggling with Inflation: The Fed then aggressively raised rates to combat inflation, indirectly pushing mortgage rates upward.
• Recent Actions: After raising the rates continuously, the Fed cut rates three times in late 2024, reducing the federal funds rate by 1 percentage point to 4.25%-4.5%.
• 2025 Status: The Fed has now held rates steady consecutively for five meetings in 2025. There are varying opinions amongst them with some advocating for immediate cuts to address slowing growth.
• Impact on Mortgage Rates: 30-year fixed rates have hovered near 6.8% through mid-2025, with modest declines expected later this year if cuts materialize.

The Big Picture: What Does It All Mean?

So, how should you interpret all of this information?

• For Homebuyers: If you're on the fence about buying, keep a close eye on the Fed's upcoming meetings, especially September 16-17 because it will give an updated economic projections, as well as the December meeting of this year. Any rate cuts could provide some relief. If you believe that interest rates will be stable in 5 years, ARM can be a good option.
• For Refinancers: If your current mortgage rate is above 7%, keep a close eye on the Fed's decision and actions. There are potential opportunities coming along the way.

I believe that nobody can accurately predict the future, it's always a smart plan to be prepared and informed. By staying informed and consulting with a financial advisor, you can make smart choices.

As of today, August 15, 2025, the national average 30-year fixed mortgage rate sits at 6.64%, but the real story is the 5-year ARM mortgage rate, which has jumped 10 basis points to 7.33%. This means if you're looking at an adjustable-rate mortgage, you'll be paying a bit more than you would have yesterday. Let's dive into what this means for you.

Mortgage Rates Today: 5-Year ARM Rises by 10 Basis Points – August 15, 2025

Why You Should Pay Attention to Mortgage Rate Fluctuations

Buying a home is one of the biggest financial decisions most of us will ever make. Even small changes in interest rates can have a huge impact on your monthly payments and the total cost of your home over the life of the loan. Think about it: even a quarter of a percent difference on a $300,000 loan adds up to thousands of dollars over 30 years. So staying informed is key to making the best choice for your situation.

Current Mortgage Rate Snapshot (August 15, 2025)

Here's a quick overview of the mortgage rates from Zillow as they stand today:

• 30-Year Fixed Rate: 6.64% (down 4 basis points from last week)
• 15-Year Fixed Rate: 5.78% (up 1 basis point from yesterday)
• 5-Year ARM: 7.33% (up 10 basis points from yesterday)

A Closer Look at Adjustable-Rate Mortgages (ARMs)

ARMs, like the 5-year ARM, can be a bit trickier than fixed-rate mortgages. Here’s the lowdown:

• What is an ARM? It's a mortgage where the interest rate is fixed for a certain initial period, after which it adjusts periodically based on a benchmark interest rate (like the Prime Rate or the SOFR). The 5-year ARM has a fixed rate for the first five years, and then adjusts annually.
• The Appeal of ARMs: People are often drawn to ARMs because they initially offer lower interest rates than fixed-rate mortgages, which is attractive for now.
• The Catch: After the initial fixed-rate period, your interest rate can go up (or down) based on the market conditions. This means your monthly payments can increase significantly if interest rates rise.

Mortgage Rates on August 15, 2025: By Loan Type

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.64%	down 0.04%	7.10%	down 0.03%
20-Year Fixed Rate	6.68%	up 0.20%	6.96%	up 0.09%
15-Year Fixed Rate	5.78%	up 0.03%	6.09%	up 0.04%
10-Year Fixed Rate	5.48%	0.00%	5.84%	0.00%
7-year ARM	7.82%	up 0.73%	7.94%	up 0.35%
5-year ARM	7.33%	up 0.10%	7.85%	up 0.07%
3-year ARM	—	0.00%	—	0.00%

Source: Zillow

Is a 5-Year ARM Right for You?

The 5-year ARM vs 30-year fixed-rate mortgage question is a crucial one. ARMs aren't right for everyone. Here are some reasons why you might consider one:

• Short-Term Plans: If you know you won't be staying in the house for more than five years, an ARM could save you money during that initial fixed-rate period.
• Expectation of Lower Rates: If you believe interest rates will decrease in the future, you might be willing to take the risk that your rate will adjust downward after the initial period.
• Financial Flexibility: Some people use the lower initial payments of an ARM to free up cash for other investments or expenses.

However, proceed with caution. I always advise people to carefully consider their risk tolerance before opting for an ARM. Could you comfortably afford your mortgage payments if the interest rate were to rise by a few percentage points? If the answer is no, a fixed-rate mortgage might be a safer bet.

The Federal Reserve's Role: A Quick Recap

The Federal Reserve (the Fed) has a big influence on mortgage rates. Here's a timeline:

• 2021-2023: The Fed raised rates aggressively to fight inflation, pushing mortgage rates way up.
• Late 2024: The Fed started cutting rates, providing some relief.
• 2025 (So Far): The Fed has paused rate cuts, creating uncertainty in the market.

The Fed's actions are always a balancing act. They want to control inflation while also supporting economic growth which gets harder everyday and is not an easy job for anybody. Right now, they are walking a tightrope, trying to figure out the best path forward. So far in 2025, Fed has held rates steady, but there are indicators of rate cuts by end of year.

The Fed's Next Moves and Their Impact on Mortgage Rates

Looking ahead, here are a few key things to watch for:

• Economic Data: The Fed will be closely monitoring inflation, GDP growth, and employment data to make their decisions.
• Upcoming Meetings: The September 16-17 meeting will be very important, as the Fed will release updated economic projections.
• Market Expectations: Keep an eye on what the market is predicting in terms of future rate cuts.

If the Fed starts cutting rates again, we could see mortgage rates decline toward 6% (or even lower) by the end of the year. But it's all dependent on how the economy performs.

My Thoughts and Advice

Navigating the world of mortgages can be confusing, and it's important to stay informed and make decisions that are right for your individual circumstances. Don't be afraid to talk to a mortgage professional who can walk you through your options and help you weigh the pros and cons of different loan types.

There's always uncertainty, and market sentiments can change in any direction. But by staying informed and carefully considering your own needs and risk tolerance, you can make smart choices that will set you up for financial success. You should always aim for a home within your budget rather than trying to max it out.

So, the big question everyone's asking is: what's happening with mortgage rates? Well, the 5-year Adjustable Mortgage Rate just jumped by 9 basis points, landing at 7.20% on August 14, 2025. This increase, reported by Zillow, naturally has potential homebuyers and current homeowners wondering what it all means and if it’s time to rethink their plans.

Mortgage Rates Today: 5-Year ARM Jumps by 9 Basis Points – August 14, 2025

Why Should You Care About ARMs Anyway?

Before we dive into the numbers, let's talk Adjustable Rate Mortgages (ARMs). Unlike fixed-rate mortgages where your interest payment stays the same over the life of the loan, ARMs have an interest rate that adjusts periodically based on market conditions. That 5-year ARM we're talking about? It means your initial interest rate is fixed for the first five years, and then it can change annually after that, usually tied to a benchmark interest rate plus a margin.

Mortgage Rate Snapshot: August 14, 2025

Okay, let's get a clear view of where all the major mortgage rates stand. This gives us some perspective on the ARM increase.

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.62%	down 0.06%	7.13%	0.00%
20-Year Fixed Rate	6.68%	up 0.20%	6.96%	up 0.09%
15-Year Fixed Rate	5.70%	down 0.05%	6.04%	down 0.01%
10-Year Fixed Rate	5.48%	0.00%	5.84%	0.00%
7-year ARM	7.82 %	up 0.73 %	7.94 %	up 0.35 %
5-year ARM	7.20%	down 0.02%	7.86%	up 0.08%
3-year ARM	—	0.00%	—	0.00%

Source: Zillow

The Jumps and Dips: Decoding the Data

Here's what jumps out at me from the rate overview:

• 30-Year Fixed Still King: The 30-year fixed remains the most popular choice, and it's actually down slightly from the week before. This is good news for people wanting predictable payments.
• ARMs are Mixed: The 5-year ARM jumped by 9 basis points, while the 7-year ARM increased by a whopping 73 basis points and the 3 year ARM didn't change! This tells me that the market is still trying to find its footing and that these short-term rates are sensitive to current fluctuations.
• 15-Year Fixed Looks Tempting: With rates at 5.70%, the 15-year fixed is definitely worth a look if you can afford the higher monthly payments. You'll pay off your mortgage much faster and save a bundle on interest.

Is a 5-Year ARM Right for You in 2025?

Now, let's get to the heart of the matter: should you even consider a 5-year ARM right now? Here's my take:

• The Upside: If you only plan to stay in the home for a short period, say less than five years, a 5-year ARM might look appealing. You could snag a slightly lower initial interest rate than a fixed-rate mortgage, potentially saving you money upfront.
• The Downside: The biggest risk with ARMs is the possibility of interest rates increasing after the initial fixed-rate period. This could lead to higher monthly payments that stretch your budget. It's like gambling a little.
• Risk Tolerance is Key: If you're comfortable with some uncertainty and believe interest rates will stay relatively stable, an ARM might be worth considering. But if you prefer the security of a fixed payment, stick with a fixed-rate mortgage. I'm a generally risk-averse person, so I usually prefer fixed-rate options for myself.

The Fed Factor: What's the Central Bank Got To Do With It?

Okay, so you're probably thinking, “What the heck's the Federal Reserve have to do with my mortgage rate?” Well, the Fed plays a huge role in setting the stage for interest rates in general. Any commentary on Adjustable Rate Mortgage (ARM) is incomplete without talking about the role of the Federal Reserve. The Fed doesn't directly set mortgage rates, but its actions influence them significantly.

Here's the gist:

• The Fed Rate Hikes of 2022-2023: To fight inflation, the Fed aggressively raised the federal funds rate, which indirectly pushed mortgage rates to 20-year highs.
• The Pivot to Cuts in Late 2024: The Fed started cutting rates to boost the economy. This gave homeowners and potential buyers some much-needed relief.
• 2025: A Holding Pattern: The Fed has held rates steady for most of 2025, mainly because they're seeing mixed signals: inflation is still a bit high, but economic growth is slowing down. It's a tough balancing act.

What the Fed's Next Move Means for You

The big question is: what's the Fed going to do next?

• September and December Meetings are Key: The Fed's meetings in September and December 2025 will be critical. They'll be looking at the latest economic data to decide whether to cut rates again or stay put.
• Potential Rate Cuts Later This Year: If the economy weakens further, the Fed is likely to cut rates again, which would likely bring mortgage rates down a bit. I think that's the likely scenario.
• Long-Term Outlook: Gradual Easing: The Fed is expected to gradually lower rates over the next few years. This should provide some long-term stability to the housing market.

How to Navigate the Current Mortgage Maze

So, what should you do given all this uncertainty? Here's my advice:

• Shop Around: Don't just go with the first mortgage lender you find. Get quotes from multiple lenders to compare rates and fees.
• Consider Your Financial Situation: Be honest with yourself about what you can afford. Don't stretch your budget too thin, especially with the possibility of rising ARM rates.
• Talk to a Mortgage Professional: A good mortgage broker can help you understand your options and find the best loan for your needs.

The Bottom Line on the 5-Year ARM Jump

The increase in the 5-year adjustable mortgage rate is something to be aware of, but it shouldn't necessarily scare you away from buying a home or refinancing. The mortgage market is dynamic, and rates are constantly fluctuating. The 5-year adjustable mortgage rates are hovering near 7.20% in the middle of August 2025 and may get better when the Fed starts cutting rates; remember to do your homework, consider your individual circumstances, and make informed decisions. Don't try to time the market perfectly.

Alright, let's dive into the mortgage market. As of today, August 5, 2025, the national average 5-year Adjustable Rate Mortgage (ARM) has risen by 3 basis points, climbing from 7.11% to 7.14%. Now, before you panic or celebrate, let's unpack what this means for you and whether a 5-year ARM is even the right tool for your financial toolbox.

Imagine trying to decide what dessert to order. Do you go for the reliable chocolate cake (a fixed-rate mortgage) or the more adventurous crème brûlée (an ARM)? Both are tasty, but one might be a better fit depending on your mood and appetite. Mortgage rates are similar – it's all about finding the right “flavor” for your financial situation.

Mortgage Rates Today: 5-Year ARM Rises by 3 basis points – August 5, 2025

Understanding Today's Mortgage Rate Environment

First, let's take a look at where rates stand overall. Here's a snapshot of some key mortgage rates as of this morning:

• 30-Year Fixed Rate: 6.66% (down 1 basis point from yesterday, down 16 basis points from last week)
• 15-Year Fixed Rate: 5.73% (unchanged from yesterday, down 15 basis points from last week)
• 5-Year ARM: 7.14% (up 3 basis points from yesterday, down 40 basis points from last week)

So, while the 5-year ARM did see a slight bump today, it's important to note that week-over-week, it's actually lower than it was. The 30-year fixed, the workhorse of the mortgage world, also dipped, and the 15-year hangs tight.

Why the ARM Increase? A Quick Look at the Bigger Picture

Interest rates, especially adjustable ones, rarely move in isolation. The slight increase in the 5-year ARM rate today likely reflects ongoing uncertainty in the broader economic environment as well as the Federal Reserve decisions which lead to rate changes. Let's refresh ourselves on the Federal Reserve's stance.

The Federal Reserve's Role in Mortgage Rates

The Federal Reserve (also known as The Fed) is like the conductor of the economic orchestra, and the federal funds rate is its baton. When the Fed raises rates, it generally becomes more expensive to borrow money, and mortgage rates tend to follow suit. Conversely, when the Fed lowers rates, borrowing becomes cheaper.

To quickly summarize the Fed’s activity:

• 2021-2023: The Fed aggressively raised the federal funds rate to combat rising inflation. In turn, this drove mortgage rates up significantly.
• Late 2024: We saw the effects taking place and in turn, the FED cut rates three times in late 2024 by one percentage point which in turn reduced the federal funds rate to 4.25%-4.5%.
• 2025: After holding rates steady for five consecutive meetings in 2025, the Fed hasn’t made any change. Currently, economic headwinds are making the entire decision more difficult.

The Fed and 2025 Monetary Decisions

Here is what is expected regarding the Fed and monetary decisions:

Sept 16-17 Meeting	Next critical juncture
December Meeting	Likely the FED’s last opportunity
Long-term Outlook	Ease gradually, rates settling near 2.25%-2.5% by 2027

The Fed has now held rates steady for five consecutive meetings in 2025 (through July 30), despite growing economic headwinds. The July 30 decision saw a 9-2 vote, with dissents from Governors Bowman and Waller advocating for immediate cuts to address slowing growth. So what does this mean for mortgage rates?

• 30-year fixed rates have hovered near 6.8% through mid-2025, with modest declines expected later this year if cuts materialize.
• The Fed’s projected two cuts in 2025 (per June “dot plot”) could eventually pull mortgage rates toward 6% by year-end, though timing remains uncertain.

Breaking Down the 5-Year ARM: How it Works

A 5-year ARM, in essence, is a hybrid mortgage. Here's how it rolls:

1. The Fixed-Rate Period: For the first five years, your interest rate stays the same, just like a fixed-rate mortgage. This is the “honeymoon” period.
2. The Adjustment Period: After those five years, your interest rate adjusts annually based on a specific index (like the Secured Overnight Financing Rate or SOFR, which has replaced the LIBOR) plus a margin. The margin is the lender's profit, and it stays fixed for the life of the loan.
3. Rate Caps: ARMs typically have caps on how much the interest rate can adjust at each adjustment period and over the life of the loan. These caps protect you from runaway rate increases.

Is a 5-Year ARM Right for You? Key Considerations

Now, for the million-dollar question: should you consider a 5-year ARM? Honestly, it depends, and here's what I would think about if I were in your shoes:

• How Long Will You Stay? This is the BIGGEST factor. If you plan to move or refinance within the next five years, a 5-year ARM could be a smart move. You'll likely benefit from a lower initial rate compared to a fixed-rate mortgage.
• Risk Tolerance: Are you comfortable with the possibility of your interest rate increasing? If you're risk-averse, a fixed-rate mortgage may offer more peace of mind.
• Financial Stability: Can you afford potential rate increases? It's crucial to factor in how much your monthly payments could rise if the interest rate adjusts upwards. Run the numbers and have a contingency plan.
• The Future Interest Rate Outlook: While predicting interest rates is a fool’s errand, it's wise to consider the general economic climate and expectations for future rate movements. Are economists forecasting lower rates in the coming years? If so, an ARM might be more attractive.

The Benefits of an ARM:

• An ARM loan could benefit you if you think interest rates will go down
• An ARM is also advantageous to you if you believe you'll move before the term is up.
• ARMs are also good because they have lower initial rates than fixed-rate mortgages.

The Downsides of an ARM:

• If intereest rates are volatile, that can cause expenses to be unpredictable.
• If the rates increase, that can cause you to struggle to pay it back.
• More complicated terms mean you may have to spend more time learning about them.

Understanding Those Numbers: A Deeper Dive Into the Data

Let's circle back to today's rates and compare them across different loan types:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.66 %	down0.16 %	7.11 %	down0.17 %
20-Year Fixed Rate	6.41 %	down0.05 %	6.80 %	down0.13 %
15-Year Fixed Rate	5.73 %	down0.15 %	6.02 %	down0.15 %
10-Year Fixed Rate	5.48 %	down0.26 %	5.84 %	down0.28 %
7-year ARM	7.08 %	down0.14 %	7.59 %	down0.29 %
5-year ARM	7.14 %	down0.40 %	7.74 %	down0.17 %

A few takeaways from this table:

• the 5 year ARM increased today, it is trending down for the week.
• The 30-year fixed rate remains the most popular choice, offering stability and predictability. The rates decreased from 6.82% to 6.66%.
• The 15-year fixed rate is at a quite attractive rate, but requires bigger monthly payments.
• The 5 year ARM has the highest rate of all.

Things to Consider Before You Move Forward

Before you jump into any mortgage decision, I highly recommend talking to a qualified mortgage professional. They can assess your individual financial situation, answer your questions, and help you determine the best loan option for your needs.

Beyond interest rates, consider these factors:

• Loan Fees and Closing Costs: Shop around and compare fees from different lenders.
• Prepayment Penalties: Are there any penalties for paying off your mortgage early?
• Long-Term Financial Goals: How does this mortgage fit into your overall financial plan?

Final Thoughts

Mortgage rates are a moving target, influenced by a complex interplay of economic factors. The slight increase in today’s 5-year ARM rate is a reminder of the dynamic nature of the market.

My personal take? Don't get too caught up in the daily fluctuations. Focus on your long-term financial goals and choose a mortgage that aligns with your comfort level and risk tolerance. Whether it's a fixed-rate, an ARM, or something else entirely, the right mortgage should help you achieve your homeownership dreams without causing unnecessary stress.

Remember to use your best judgement and happy house hunting!