If you're considering a mortgage, you'll want to know about this: On August 4, 2025, the national average 5-year Adjustable Rate Mortgage (ARM) rate decreased by 6 basis points, landing at 7.11%. This slight dip, from 7.17%, might have you wondering if an ARM is the right choice for you. Let's dig into what this means for potential homebuyers and those looking to refinance.

Mortgage Rates Today: 5-Year ARM Goes Down by 6 Basis Points – August 4, 2025

What's Behind the Mortgage Rate Movements?

Several factors play a role in determining mortgage rates. Let's take a look:

• The Federal Reserve (The Fed): The Fed’s monetary policies are the primary drivers of mortgage rate trends.
• Economic Growth: A strong economy typically leads to higher rates as demand for borrowing increases. Conversely, a slowing economy can push rates down.
• Inflation: High inflation often forces the Federal Reserve to raise interest rates to cool down the economy, which can impact mortgage rates.
• Global Events: International events, such as political instability or economic crises, can create uncertainty and impact mortgage rates.

The Big Picture: Where Rates Stand Today

Beyond the 5-year ARM, here's a snapshot of how other mortgage rates are trending as of August 4, 2025:

• 30-Year Fixed Rate: 6.68% (down 1 basis point)
• 15-Year Fixed Rate: 5.73% (down 3 basis points)

Here's a tabular comparison of current mortgage rates:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.68%	down 0.14%	7.13%	down 0.15%
20-Year Fixed Rate	6.41%	down 0.05%	6.89%	down 0.04%
15-Year Fixed Rate	5.73%	down 0.15%	6.02%	down 0.15%
10-Year Fixed Rate	5.48%	down 0.26%	5.84%	down 0.28%
7-year ARM	6.88%	down 0.35%	7.66%	down 0.21%
5-year ARM	7.11%	downt 0.43%	7.71%	down 0.20%
3-year ARM	—	0.00%	—	0.00%

Source: Zillow

Digging Deeper: Adjustable Rate Mortgages (ARMs)

An ARM offers an initial period with a fixed interest rate, after which the rate adjusts periodically based on a benchmark index plus a margin. Let's dissect what this implies:

• Initial Fixed Period: In the case of the 5-year ARM, you'll have a fixed interest rate for the first five years of the loan.
• Adjustment Period: After the initial period, the interest rate will adjust, usually annually, based on a pre-determined index (like the SOFR) plus a margin determined by the lender.
• Rate Caps: ARMs typically have rate caps that limit how much the interest rate can increase at each adjustment and over the life of the loan.

The Fed's Impact: A Year of Waiting and Watching

As we move through 2025, the Federal Reserve's decisions continue to heavily influence mortgage rates. The rate hike cycle ended in 2023, and the Fed even cut rates three times in late 2024, bringing the federal funds rate to 4.25%-4.5%. However, throughout 2025, the Fed has paused on further cuts, leading to uncertainty.

Even though the Fed has held rates steady to date, there is internal disagreement. Some members advocate for immediate cuts to stimulate slowing growth. The economic data paints a mixed picture with inflation remaining stubborn around 2.7% and GDP growth slowing to around 1.2% in the first half of 2025.

Fixed-Rate vs. Adjustable-Rate: Which is Right for You?

Choosing between a fixed-rate mortgage and an ARM is a crucial decision. Here's a breakdown:

Fixed-Rate Mortgage:

• Pros: Predictable monthly payments, stability during periods of rising interest rates.
• Cons: Typically higher initial interest rates compared to ARMs, may miss out on potential savings if rates fall.

Adjustable-Rate Mortgage:

• Pros: Lower initial interest rates, potential for lower overall costs if interest rates remain stable or fall.
• Cons: Risk of rising monthly payments if interest rates increase, uncertainty about future housing costs.

Here is a table to help you choose:

Feature	Fixed-Rate Mortgage	Adjustable-Rate Mortgage (ARM)
Interest Rate	Remains constant throughout the loan term	Varies after the initial fixed period
Payment Amount	Stays the same for the life of the loan	Can fluctuate based on interest rate adjustments
Risk	Lower risk, predictable expenses	Higher risk, potential for rising costs
Best For	Those seeking stability and long-term predictability	Those comfortable with some risk and potential for savings

My Take: Weighing the Options

In my experience, the ideal choice depends on your individual circumstances and risk tolerance. Here is a handy guide:

• If you plan to stay in your home for longer than five years and value predictability, a fixed-rate mortgage might be the better option.
• If you anticipate moving within the next few years or believe interest rates will remain stable or decline, an ARM could save you money.

The Road Ahead: What to Watch For

Keep an eye on these key dates and events:

• September 16-17 Meeting: The Federal Reserve will meet to discuss monetary policy and update economic projections.
• December Meeting: This is likely the last opportunity for the Fed to cut rates in 2025 if they haven't already done so.

The Fed's anticipated gradual easing, with rates potentially settling near 2.25%-2.5% by 2027, offers a glimpse into the longer-term outlook.

Advice for Borrowers

• Current Homebuyers: While rates remain elevated, the Fed's signals suggest that some relief may come in late 2025 or early 2026.
• Refinancers: Those with rates above 7% should closely monitor the September and December Fed decisions for potential refinancing opportunities.

Final Thoughts

Navigating the mortgage market can be complex, but staying informed and understanding your options is essential. The 6 basis point decrease in the 5-year ARM rate is just one piece of the puzzle. By considering your personal circumstances, risk tolerance, and the broader economic outlook, you can make a well-informed decision that aligns with your financial goals.

Are you keeping an eye on mortgage rates? If you're thinking about buying a home or refinancing, you should be! According to Zillow, the national average 5-year Adjustable Rate Mortgage (ARM) rate has decreased to 7.16%, a 14-basis-point drop from the previous rate of 7.30%. While this might seem small, every little bit helps when you're dealing with a mortgage. Let's dive deeper into what this means for you and the broader housing market.

Today's 5-Year Adjustable Rate Mortgage Goes Down 14 Basis Points From 7.30% to 7.16% – Aug 2, 2025

A Closer Look at Today's Mortgage Rate Changes

It's not just the 5-year ARM that's been moving. Here's a snapshot of how different mortgage types are performing as of today:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.68%	down 0.17%	7.13%	down 0.19%
20-Year Fixed Rate	6.34%	down 0.04%	6.84%	up 0.06%
15-Year Fixed Rate	5.74%	down 0.16%	6.03%	down 0.18%
10-Year Fixed Rate	5.94%	up 0.19%	6.34%	up 0.22%
7-year ARM	6.88%	up 0.11%	7.66%	up 0.01%
5-year ARM	7.16%	down 0.57%	7.72%	down 0.30%
3-year ARM	—	0.00%	—	0.00%

Source: Zillow

As you can see, most fixed-rate mortgages have also seen a slight decrease this week, which is generally good news for potential homebuyers.

Why the Focus on ARMs? Understanding the Basics

An Adjustable Rate Mortgage (ARM) is a type of mortgage where the interest rate is not fixed for the entire loan term. Instead, it's fixed for an initial period (in this case, five years) and then adjusts periodically based on a benchmark interest rate.

• The Initial Fixed Period: This is when you get a predictable interest rate and monthly payment.
• The Adjustment Period: After the initial period, your interest rate can go up or down depending on market conditions.

The 5-year ARM is a popular choice for folks who don't plan on staying in their home for more than five years, or those who believe interest rates will go down in the future. They are betting that they will sell or refinance the home before the rate adjusts upward significantly.

The Fed's Role: The Puppet Master Behind the Curtain

Mortgage rates don't just appear out of thin air. They are heavily influenced by the Federal Reserve (the Fed), which is the central bank of the United States. The Fed uses monetary policy, like adjusting the federal funds rate (the rate at which banks lend money to each other overnight), to try to keep the economy stable.

Here's a quick recap of the Fed's recent actions:

• 2021-2023: Rate Hikes to Fight Inflation: Remember those pandemic-era low interest rates? Well, to combat rising inflation, the Fed aggressively raised the federal funds rate by 5.25 percentage points, pushing mortgage rates up to 20-year highs.
• Late 2024: A Glimmer of Hope (Rate Cuts): After a period of holding steady, the Fed cut rates three times at the end of 2024, reducing the federal funds rate by 1 percentage point.
• 2025: A Year of Waiting: So far in 2025, the Fed has held rates steady, creating some uncertainty in the market.

As of July 30, 2025, there was even disagreement within the Fed, with some members pushing for immediate rate cuts due to a slowing economy.

Digging Deeper: The Economic Crosscurrents

The Fed's decisions are based on a complex mix of economic data. Here are some key factors influencing their choices:

• Inflation: Core PCE (Personal Consumption Expenditures), a measure of inflation, is still above the Fed's target. This is making them hesitant to cut rates too quickly.
• Economic Growth: GDP (Gross Domestic Product) growth has slowed down, and unemployment is creeping up. This is putting pressure on the Fed to lower rates to stimulate the economy.
• Geopolitical Tensions: Increased tariffs and geopolitical uncertainty further complicate the economic outlook.

What Does This Mean for You? Practical Implications

So, how does all of this translate into your everyday life?

• Current Homebuyers: If you're in the market to buy a home, be aware that rates are still relatively high. However, the Fed's signals suggest that some relief may be coming later in 2025 or early 2026.
• Refinancers: If you have a mortgage rate above 7%, keep a close eye on the Fed's upcoming meetings in September and December. These meetings could provide clues about potential rate cuts.
• Investors: The bond market still remains volatile in lieu of the decision. Also, the 10 year treasury yield will be sensitive to the Fed rhetoric.

Basically, for the people buying now, it could be good especially the ARMs, and for the refinancers, they need to monitor the trend.

The Future: What to Expect

The Fed is expected to gradually ease monetary policy over the next few years. Their projections suggest that rates could settle near 2.25%-2.5% by 2027. But in this ever changing world, it is only projections and is subject to change due to unforeseen circumstances.

Here are some key dates to watch:

• September 16-17 Meeting: The next critical juncture, with updated economic projections.
• December Meeting: Likely the Fed's last realistic 2025 opportunity if September passes without action.

Why Choose a 5-Year ARM? Pros and Cons

Here's a quick breakdown of the advantages and disadvantages of a 5-year ARM:

Pros:

• Lower Initial Interest Rate: You typically get a lower interest rate compared to a fixed-rate mortgage, which can save you money in the short term.
• Flexibility: If you don't plan on staying in your home for more than five years, an ARM can be a good option.
• Potential for Rate Decreases: If interest rates go down during the adjustment period, your mortgage payment could decrease.

Cons:

• Rate Adjustments: After the initial fixed period, your interest rate can increase, leading to higher monthly payments.
• Uncertainty: It's hard to predict where interest rates will be in the future, so you're taking a risk when you choose an ARM.
• Complexity: ARMs can be more complicated than fixed-rate mortgages, so it's important to understand how they work.

My Take: A Cautious Optimism

While the decrease in the 5-year ARM rate is good news, it's essential to approach the situation with informed caution. The economy is still facing numerous challenges, and the Fed's actions are not always predictable.

If you're considering an ARM, do your research and understand the risks involved. Talk to a mortgage professional to get personalized advice based on your financial situation and goals.

Remember, buying a home is a big decision. Take your time, weigh your options, and make sure you're comfortable with your choice.

As of today, July 14, 2025, if you're looking at a 5-year Adjustable Rate Mortgage (ARM), you'll find that the average rate has decreased slightly, dropping from 7.89% to 7.84%. This small dip might be good news for some, but is it the right move for you? Keep reading as I unpack what's happening in the mortgage market and if an ARM could be a smart choice for your situation.

Today’s Mortgage Rates: 5-Year ARM Drops Slightly to 7.84% – July 14, 2025

The world of mortgage rates can seem baffling. Rates fluctuate depending on various scenarios. Keeping up with the changing numbers can feel like doing complicated math homework every day. So, let's break down all the factors that affect today's mortgage rates:

• The Economy: This is the big picture. Is the economy growing? Are people employed? If things are generally looking good, interest rates tend to rise. If things are shaky, rates often drop to encourage borrowing and spending.
• Inflation: One of the biggest drivers of interest rates is inflation. If the prices of everyday goods and services are increasing, it is likely that you'll see your mortgage rate rise, accordingly.
• The Federal Reserve (The Fed): The Fed is like the conductor of the economic orchestra. The Federal Reserve influences the financial markets through its monetary policy in an effort to keep the economy on track.
• The Bond Market: Mortgage rates are closely tied to the bond market, particularly the yield on 10-year Treasury bonds. When bond yields go up, mortgage rates usually follow suit.
• Global Events: Major world events, like a crisis somewhere across the globe, can create uncertainty that impacts financial markets and mortgage rates.

The Current Mortgage Rate Snapshot (July 14, 2025)

Let's take a look at Zillow's data for the current rates across different types of mortgages as of today:

Conforming Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.86%	up 0.02%	7.32%	up 0.03%
20-Year Fixed Rate	6.53%	up 0.06%	6.62%	down 0.29%
15-Year Fixed Rate	5.91%	up 0.03%	6.22%	up 0.04%
10-Year Fixed Rate	6.03%	up 0.25%	6.12%	up 0.14%
7-year ARM	7.74%	up 0.16%	8.22%	up 0.13%
5-year ARM	7.84%	down 0.04%	8.13%	down 0.01%
3-year ARM	—	0.00%	—	0.00%

Government Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.80%	down 0.01%	7.82%	down 0.01%
30-Year Fixed Rate VA	6.30%	down 0.01%	6.52%	0.00%
15-Year Fixed Rate FHA	5.36%	down 0.05%	6.32%	down 0.05%
15-Year Fixed Rate VA	5.82%	down 0.02%	6.17%	0.00%

Jumbo Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.33%	up 0.10%	7.75%	up 0.10%
15-Year Fixed Rate Jumbo	6.73%	up 0.12%	6.96%	up 0.08%
7-year ARM Jumbo	7.53%	0.00%	7.70%	0.00%
5-year ARM Jumbo	7.38%	down 0.04%	7.87%	down 0.04%
3-year ARM Jumbo	—	0.00%	—	0.00%

The Slight Dip in 5-Year ARM: What Does It Mean?

The 5-Year ARM is currently sitting at 7.84%, a decrease of 5 basis points from last week. While a small dip in rates is generally positive, it's important to remember that ARMs come with their own set of considerations. Understanding how these loans work is vital before jumping in.

What is an Adjustable Rate Mortgage (ARM)?

Unlike a fixed-rate mortgage, where the interest rate remains the same for the life of the loan, an ARM has an interest rate that can change periodically. The 5-year ARM means that your initial interest rate is fixed for the first five years, after which it adjusts annually based on prevailing market conditions.

Why the Initial Attraction?

• Lower Initial Rate: ARMs often start with a lower interest rate than fixed-rate mortgages. This can translate to lower monthly payments in the first few years, freeing up cash for other expenses.
• Potential for Savings: If interest rates decrease during the adjustment period, your mortgage rate (and therefore your monthly payment) could go down. This can save you a significant amount of money over the life of the loan.

The Potential Downsides

• Rate Increases: The biggest risk with an ARM is that interest rates could rise. If rates go up significantly when your loan adjusts, your monthly payments could become substantially higher.
• Uncertainty: With an ARM, it's difficult to predict your future monthly payments. This uncertainty can make it harder to budget and plan your finances.
• Complexity: ARMs can be more complex than fixed-rate mortgages. It's important to understand the terms of your loan, including how often the rate adjusts, the caps on interest rate increases, and the index used to calculate the new rate.

Is a 5-Year ARM Right for You? Some Personal Thoughts

Here's my take on whether a 5-year ARM might be a good fit for you:

• Short-Term Homeownership Plans: If you plan to move or refinance within the next five years, an ARM could be a smart move. You can take advantage of the lower initial rate without worrying too much about future rate increases.
• Expecting Income Growth: If you anticipate your income increasing significantly in the next few years, you might be more comfortable with the risk of a potential rate hike. My experience tells me, however, that relying on future plans is frequently a recipe for disaster. I personally wouldn't take out a mortgage on the strength of a promise down the line.
• Comfortable with Risk: If you're financially disciplined and prepared to handle potential payment increases, an ARM could be a viable option. This is only if you have a solid emergency fund and the ability to absorb higher housing costs, should they arise.

However, consider the following:

• Long-Term Homeownership: If you plan to stay in your home for the long haul, a fixed-rate mortgage might be a better choice. The predictability of a fixed rate can provide peace of mind and protect you from rising interest rates.
• Risk Averse: If you're uncomfortable with the idea of your mortgage payment potentially increasing, a fixed-rate mortgage is likely the way to go. Remember, housing should be a source of comfort, not stress.

The Fed's Impact on Mortgage Rates

The Federal Reserve is the big player influencing these rates. They have been carefully navigating economic crosscurrents.

Recent actions of the Fed regarding economic plans include:

• Rate Cuts Made in Late 2024: The Fed cut rates three times in late 2024 (September to December), reducing the federal funds rate by 1 percentage point to a target range of 4.25%–4.5%, where it has remained through June 2025.
• Two Possible Rate Cuts for 2025: The Fed’s June 2025 meeting reaffirmed plans for two rate cuts in 2025, but policymakers are divided on timing and magnitude.

Final Thoughts: Do Your Homework!

Whether a 5-year ARM is the right choice for you depends entirely on your individual circumstances, financial situation, and risk tolerance. Take some time to carefully evaluate your options, compare rates from different lenders, and consider consulting with a qualified financial advisor. I believe your peace of mind is most important, so choose the path that allows you to sleep soundly at night.

If you're considering buying a home, you're probably keeping a close eye on mortgage rates. According to Zillow, as of today, July 12, 2025, the national average for a 5-year Adjustable Rate Mortgage (ARM) has climbed to 7.89%. Understanding what this means for you is crucial, and I'm here to break it down.

Today’s Mortgage Rates: 5-Year Adjustable Rate Hits 7.89% – July 12, 2025

What's Happening with Mortgage Rates?

Let's take a step back and see the bigger picture. While the 5-year ARM increased slightly to 7.89%, it's just one piece of a larger puzzle. Here's how other key mortgage rates are trending:

• 30-Year Fixed Rate: 6.87% (up from 6.77% last week)
• 15-Year Fixed Rate: 5.90% (up from 5.89% last week)

You can see that most rates are creeping upwards. This movement reflects broader economic factors at play, which I'll touch upon in the next section.

Why Are Rates Moving? The Fed's Role and Economic Crosscurrents

The Federal Reserve's actions are a major influence on mortgage rates. Currently, even though the Fed cut rates three times in late 2024 (reducing the federal funds rate to a target range of 4.25%-4.5%), the effects on mortgage rates are complex.

Here's a breakdown of what's influencing the Fed's decisions and, therefore, mortgage rates:

• Inflation Outlook: The Fed is carefully monitoring how tariffs are impacting inflation. While they see it as a temporary shock, it complicates the timing of future rate cuts.
• Economic Slowdown: GDP growth is projected to be 1.4% for 2025, down from 1.7%. A weaker economy might push the Fed to cut rates sooner rather than later.
• The Dot Plot: The “dot plot” indicates the possibility of the federal funds rate falling to 3.9% by year-end 2025, with further cuts in 2026–2027

While future rate cuts are anticipated, the exact timing is uncertain as certain policymakers are divided on the issue.

Understanding Adjustable Rate Mortgages (ARMs)

Before diving deeper into the implications of the 5-year ARM rate, it's good to know what exactly an ARM loan is. Unlike fixed-rate mortgages where your interest rate stays the same for the life of the loan, ARMs have an interest rate that adjusts periodically.

A 5-year ARM means the initial interest rate is fixed for the first five years. After that, the rate adjusts annually based on a pre-determined index plus a margin. The margin is a fixed number set by the lender, while the index is a benchmark rate that fluctuates with market conditions.

The Pros and Cons of a 5-Year ARM

Here's where you need to think carefully about your personal circumstances. ARMs can be a good choice for some, but not for everyone.

Pros:

• Lower Initial Rate: ARMs typically start with a lower interest rate than fixed-rate mortgages. This can translate to lower monthly payments in the first few years.
• Potential Savings: If interest rates fall during the adjustment period, your ARM rate could decrease, leading to even lower payments.
• Short-Term Ownership: If you plan to sell your home within the first five years, the adjustable rate might not even come into play.

Cons:

• Rate Uncertainty: After the initial fixed period, your interest rate can fluctuate, potentially leading to higher monthly payments.
• Interest Rate Risk: If interest rates rise significantly, your mortgage payments could increase substantially. This can strain your budget.
• Complexity: understanding the index, margin and calculation can be complex.

5-Year ARM vs. 30-Year Fixed: Which Is Right for You?

This is the million-dollar question! I've always advised clients to carefully weigh the pros and cons of each option based on their unique situation. To help you think it through, let's compare the two side-by-side:

Feature	30-Year Fixed Rate Mortgage	5-Year Adjustable Rate Mortgage (ARM)
Interest Rate	Fixed for the life of the loan	Fixed for 5 years, then adjusts annually
Payment Stability	Highly Stable	Uncertain – Can fluctuate after the initial fixed period
Best For	Those who want predictability and long-term security	Those who plan to sell or refinance within 5 years, or who believe rates will fall
Risk Level	Low	Moderate to High

The Current ARM Landscape (July 12, 2025): Is It a Good Time?

Given the current economic climate and the rising 5-year ARM rate of 7.89%, it's imperative to consider what to do.

Here's my take:

• Assess Your Risk Tolerance: Are you comfortable with the possibility of your mortgage rate increasing after five years? If not, a fixed-rate mortgage might be a better fit.
• Consider Your Time Horizon: How long do you plan to stay in the home? If it's less than five years, an ARM could be advantageous, but still not without some risk depending on how interest rates shift at the time.
• Factor in Future Rate Cut Expectations: The Fed is expected to cut rates in the future, and so if you are planning to stay in your home for more than 5 years, the ARM might be a good option.
• Shop Around: Just like with any mortgage, getting quotes from multiple lenders is crucial. Different lenders will offer different margins and loan terms.

Other Mortgage Options: A Quick Overview

It's worth remembering that the 5-year ARM and 30-year fixed-rate mortgage aren't your only choices. Here's a quick look at some other options:

• 15-Year Fixed Rate: Offers a shorter repayment term and lower interest rates than a 30-year fixed, but higher monthly payments.
• 7-Year ARM: Similar to a 5-year ARM, but with a seven-year fixed-rate period.
• Government Loans: FHA and VA loans can provide more lenient credit requirements and lower down payments, but often come with stricter eligibility criteria. Other Type of Loans and Their trends

Type of Loan	Rate
30-Year Fixed Rate FHA	7.13%
30-Year Fixed Rate VA	6.36%
15-Year Fixed Rate FHA	5.33%
15-Year Fixed Rate VA	5.90%
30-Year Fixed Rate Jumbo	7.30%
15-Year Fixed Rate Jumbo	6.77%
7-year ARM Jumbo	7.53%
5-year ARM Jumbo	7.35%

My Advice: Talk to a Mortgage Professional

Navigating the world of mortgages can be overwhelming. That's why I always recommend consulting with a qualified mortgage professional. They can analyze your specific financial situation, help you understand your options, and guide you towards the best loan for your needs. They can help you understand all your options and choose the mortgage that aligns with your needs and goals.

Final Thoughts: The rise of the 5-year ARM rate to 7.89% is a reminder that mortgage rates are constantly in flux. Understanding the factors that influence these rates and carefully weighing your options is essential before taking the plunge into homeownership. By staying informed and seeking professional guidance, you can make a confident and financially sound decision.

Are you trying to keep up with the ever-changing mortgage market? Today, July 9, 2025, potential homebuyers are seeing some shifts. The national average for a 5-year Adjustable-Rate Mortgage (ARM) has jumped to 7.89%. That's a significant move that could impact your home-buying strategy. Let's break down what this means for you, compare it to other mortgage options, and explore potential future trends.

Today's 5-Year Adjustable Rate Mortgage Rises Significantly by 30 Basis Points – July 9, 2025

As of today, here's a snapshot of where mortgage rates stand, according to Zillow:

• 30-Year Fixed Mortgage Rate: 6.83% (up 6 basis points from the previous week)
• 15-Year Fixed Mortgage Rate: 5.88%
• 5-Year ARM: 7.89% (up 30 basis points from the previous week)

It's worth noting that the 30-year fixed rate, the most popular choice, actually decreased by 3 basis points from yesterday to 6.83%. However, the increase in the 5-year ARM rate is the headline news, suggesting some potential volatility in the market. 30 basis points is quite a notable jump in terms of mortgages.

Why the Focus on the 5-Year ARM?

While fixed-rate mortgages offer stability, ARMs, especially the 5-year variety, can be attractive to certain borrowers. But what exactly is an ARM, and why does this rate surge matter?

An ARM works like this: For a set period (in this case, five years), you pay a fixed interest rate. After that period, the rate adjusts periodically based on a benchmark index, plus a margin determined by the lender.

ARMs can be appealing when:

• You expect to move or refinance before the fixed-rate period ends.
• You believe interest rates will decrease in the future.
• You want a lower initial rate than a fixed-rate mortgage to qualify for a larger loan.

However, the risk is that your interest rate could increase after the fixed period, leading to higher monthly payments. This is where the recent surge in the 5-year ARM rate should give potential borrowers pause.

Breaking Down the Numbers: A Detailed Look

Here's a more comprehensive view of current mortgage rates across different loan types:

Conforming Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.83%	up 0.05%	7.29%	up 0.06%
20-Year Fixed Rate	6.56%	up 0.21%	7.06%	up 0.37%
15-Year Fixed Rate	5.88%	up 0.07%	6.18%	up 0.08%
10-Year Fixed Rate	5.58%	down 0.04%	5.77%	0.00%
7-year ARM	7.43%	up 0.08%	7.98%	up 0.19%
5-year ARM	7.89%	up 0.30%	8.15%	up 0.16%
3-year ARM	—	0.00%	—	0.00%

Government Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.45%	down 0.32%	7.47%	down 0.33%
30-Year Fixed Rate VA	6.30%	up 0.01%	6.50%	0.00%
15-Year Fixed Rate FHA	5.34%	down 0.03%	6.31%	down 0.04%
15-Year Fixed Rate VA	5.79%	0.00%	6.12%	down 0.01%

Jumbo Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.18%	up 0.01%	7.54%	down 0.03%
15-Year Fixed Rate Jumbo	6.66%	up 0.18%	6.88%	up 0.15%
7-year ARM Jumbo	7.53%	up 0.10%	7.70%	down 0.31%
5-year ARM Jumbo	7.47%	down 0.01%	7.93%	down 0.03%
3-year ARM Jumbo	—	0.00%	—	0.00%

APR stands for Annual Percentage Rate, which includes additional costs of the loan.

Note: Rates can change throughout the day.

30-Year Fixed vs. 5-Year ARM: A Crucial Comparison

The decision between a 30-year fixed-rate mortgage and a 5-year ARM is a big one. Here's a simplified breakdown:

Feature	30-Year Fixed	5-Year ARM
Interest Rate	Remains the same for the entire loan term.	Fixed for the first five years, then adjusts periodically.
Monthly Payments	Consistent and predictable.	Could change after the initial five-year period, depending on market conditions.
Predictability	High. You know exactly what your payments will be for the next 30 years.	Lower initially but unpredictable in the out years
Risk	Lower. You're protected from rising interest rates.	Higher. Your rate could increase significantly, especially in a rising-rate environment.
Best Suited For	Homebuyers who value stability, plan to stay in their home for the long term, and prefer predictable payments.	Homebuyers who plan to move or refinance within five years, are comfortable with some risk, and believe interest rates will fall or stay low after the initial period.

My Thoughts and Recommendations

Given the current economic climate, and the recent surge in the 5-year ARM, I personally would approach ARMs with caution. While the initial lower rate might seem attractive, the potential for future rate hikes could outweigh the benefits, especially since there's global uncertainty.

I believe that for most homebuyers, the peace of mind that comes with a fixed-rate mortgage is worth the slightly higher initial interest rate. Knowing your payments will remain stable for the next 15 or 30 years allows for better financial planning.

However, everyone's situation is different. If you are considering an ARM, make sure you:

• Understand the terms: Know how often the rate adjusts, what index it's based on, and what the rate caps are.
• Calculate the worst-case scenario: What would your payment be if the rate increased to its maximum allowed level? Can you still afford that?
• Have a plan: What will you do if rates rise? Refinance? Move?

Looking Ahead: What Could Influence Future Mortgage Rates?

Mortgage rates are influenced by a complex interplay of factors, including:

• Inflation: Rising inflation often leads to higher interest rates.
• Economic Growth: A strong economy can push rates up.
• Federal Reserve Policy: The Fed's decisions on interest rates have a direct impact on mortgage rates.
• Treasury Yields: Mortgage rates tend to track the yield on 10-year Treasury bonds.
• Global Events: Unexpected events can create economic uncertainty and impact interest rates.

I think it's important to stay informed about these factors and consult with a mortgage professional to get personalized advice based on your financial situation and risk tolerance. No advice can be perfectly planned, so keeping up to date and working with your mortgage company to predict and take preemptive measures can turn the scales in your favor.

The Bottom Line

The mortgage market is dynamic, and rates can change quickly. The recent increase in the 5-year ARM rate highlights the importance of understanding the different mortgage options available and carefully weighing the risks and benefits, especially in such unique economic times. Whether you opt for a fixed rate or an ARM, do your research, crunch the numbers, and make an informed decision that aligns with your financial goals and comfort level.

Jumping into the housing market or considering a refinance? One of the first things you’ll want to know about are today's mortgage rates. According to Zillow, as of July 7, 2025, the national average for a 5-year Adjustable Rate Mortgage (ARM) has climbed to 7.56%, marking a significant increase of 27 basis points from the previous rate of 7.29%. Let's break down what this means for you, explore the broader rate environment, and discuss some strategies for navigating the current market.

Today's Mortgage Rates: 5-Year ARM Surges by 27 Basis Points to 7.56%

ARM Rates on the Rise: What's Happening?

The increase in 5-year ARM rates is particularly noteworthy. ARMs, as the name suggests, come with interest rates that are fixed for an initial period (in this case, five years) and then adjust periodically based on a benchmark interest rate.

Here's what you need to know about this increase:

• Short-Term Impact: This rise makes 5-year ARMs more expensive upfront, potentially impacting affordability for some borrowers.
• Long-Term Implications: Borrowers opting for a 5-year ARM are betting that interest rates will either stay the same or decrease after the initial fixed-rate period. If rates rise significantly, their monthly payments could jump up.
• Market Signals: The increase in ARM rates could signal changing expectations regarding future interest rate movements. Lenders are factoring in potential rate hikes into their pricing of ARMs.

Current Mortgage Rate Snapshot

Let's take a broader look at where mortgage rates stand across different loan types on July 7, 2025, according to Zillow:

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.81%	up 0.03%	7.26%	up 0.04%
20-Year Fixed Rate	6.50%	up 0.15%	6.75%	up 0.06%
15-Year Fixed Rate	5.88%	up 0.07%	6.17%	up 0.07%
10-Year Fixed Rate	5.58%	down 0.04%	5.77%	0.00%
7-year ARM	6.73%	down 0.62%	7.57%	down 0.23%
5-year ARM	7.56%	up 0.03%	8.01%	up 0.03%
3-year ARM	—	0.00%	—	0.00%

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.54%	down 0.24%	7.56%	down 0.25%
30-Year Fixed Rate VA	6.32%	up 0.03%	6.53%	up 0.03%
15-Year Fixed Rate FHA	5.63%	up 0.25%	6.59%	up 0.25%
15-Year Fixed Rate VA	5.83%	up 0.04%	6.17%	up 0.05%

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.23%	up 0.06%	7.64%	up 0.08%
15-Year Fixed Rate Jumbo	6.39%	down 0.09%	6.64%	down 0.09%
7-year ARM Jumbo	7.42%	0.00%	8.00%	0.00%
5-year ARM Jumbo	7.20%	down 0.28%	7.82%	down 0.14%
3-year ARM Jumbo	—	0.00%	—	0.00%

Key Takeaways:

• 30-Year Fixed Rates: The most popular mortgage type, the 30-year fixed rate, is currently averaging around 6.81%. This provides stability and predictability for homeowners.
• 15-Year Fixed Rates: If you can afford the higher monthly payments, a 15-year fixed rate offers the benefit of paying off your mortgage faster and saving significantly on interest over the life of the loan. Rates hover around 5.88%.
• Government-Backed Loans: FHA and VA loans offer more accessible options for borrowers with lower credit scores or smaller down payments. Rates typically track slightly lower than conventional loans.
• Jumbo Loan: For high value homes (exceeding the conforming loan limit), you may go with Jumbo loans. The rates are slightly higher in comparision.

Fixed vs. Adjustable: Which is Right for You?

Choosing between a fixed-rate mortgage and an ARM is a crucial decision and depends greatly on your personal circumstances and risk tolerance.

• Fixed-Rate Mortgage: Ideal if you value stability and want to know exactly what your monthly payments will be for the life of the loan. This is a good choice for long-term homeowners. I find that most people feel secure when they know their payments won't change.
• Adjustable-Rate Mortgage (ARM): ARMs can be attractive if you plan to move or refinance before the fixed-rate period ends. They often offer lower initial rates, which can save you money in the short term. However, be mindful of the potential for your rate to increase.

Factors to Consider Before Choosing an ARM

Before jumping into a 5-year ARM, here are some crucial factors:

• Your Time Horizon: How long do you plan to stay in the home? If it's less than five years, an ARM might be a good fit.
• Interest Rate Outlook: What are your expectations for future interest rates? If you believe rates will stay low or decrease, an ARM could save you money.
• Risk Tolerance: Are you comfortable with the possibility of your mortgage payment increasing? If not, a fixed-rate mortgage is a safer bet.
• Worst-Case Scenario: Understand the maximum interest rate your ARM could adjust to (the “cap”). Can you afford the highest possible payment?

I cannot stress enough how important it is to be prepared. The market is constantly changing. Whether you're buying or refinancing, it's worthwhile to do your research and be prepared to make an informed decision.

If you've been eyeing a home purchase or considering refinancing, today's news could be a game-changer. According to Zillow, on July 5, 2025, the national average 5-year Adjustable Rate Mortgage (ARM) has taken a significant dive, dropping a substantial 50 basis points to 7.12%. This dramatic shift presents a potential opportunity for borrowers, and here’s a deep dive into what it means, why it matters, and how you can leverage this information.

Mortgage Rates Today – July 5, 2025: 5-Year ARM Drops Massively by 50 Basis Points

Why This Matters: A Closer Look at the Mortgage Rate Dip

Okay, so a 50 basis point drop sounds good, but what does it really mean? The short answer is savings. A basis point is one-hundredth of one percent. A drop like this, while seemingly small, can translate to potentially thousands of dollars saved over the life of a loan, depending on the loan amount.

Here's a breakdown of current rates against week-over-week changes.

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.79 %	0.00 %	7.25 %	up0.01 %
20-Year Fixed Rate	6.54 %	up0.28 %	6.92 %	up0.29 %
15-Year Fixed Rate	5.86 %	up0.05 %	6.15 %	up0.05 %
10-Year Fixed Rate	5.58 %	down0.12 %	5.77 %	down0.23 %
7-year ARM	7.63 %	up0.48 %	7.84 %	up0.02 %
5-year ARM	7.13 %	down0.34 %	7.72 %	down0.21 %
3-year ARM	—	0.00 %	—	0.00 %

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.60 %	down0.64 %	7.63 %	down0.65 %
30-Year Fixed Rate VA	6.35 %	up0.08 %	6.57 %	up0.09 %
15-Year Fixed Rate FHA	5.45 %	down0.82 %	6.41 %	down0.83 %
15-Year Fixed Rate VA	5.83 %	up0.05 %	6.19 %	up0.08 %

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.29 %	up0.15 %	7.76 %	up0.20 %
15-Year Fixed Rate Jumbo	6.32 %	down0.22 %	6.63 %	down0.17 %
7-year ARM Jumbo	7.42 %	0.00 %	8.00 %	0.00 %
5-year ARM Jumbo	7.66 %	up0.19 %	8.11 %	up0.17 %
3-year ARM Jumbo	—	0.00 %	—	0.00 %

Keep in mind that these are just averages! The rate you actually get will depend heavily on several things, including:

• Your credit score: Lenders reward good credit with lower rates.
• Down payment: Putting more money down typically unlocks better rates.
• Loan type: Different loan types (conventional, FHA, VA) have different rate structures.
• The overall economic climate: Broader economic conditions influence mortgage rates.

Understanding the 5-Year ARM: How It Works

An Adjustable Rate Mortgage (ARM) isn't like your standard fixed-rate mortgage. Here's the basic concept:

• Initial Fixed Period: With a 5-year ARM, you get a fixed interest rate for the first five years of the loan. This is where you benefit from the lower rate we see today. Your payments will be stable and predictable during this period. This is critical to your budget.
• Adjustment Period: After those five years, the interest rate “adjusts” (hence the name) based on a benchmark interest rate called an index, plus a margin that the lender adds on top. The Index is generally tied to securities like one-year constant maturity Treasury (CMT) securities, the Cost of Funds Index (COFI) or the Secured Overnight Funding Rate (SOFR). The margin is a fixed percentage the lender adds to the index to determine your adjustable interest rate.

Why Would You Choose a 5-Year ARM?

The biggest draw of a 5-year ARM is often the lower initial interest rate compared to fixed-rate mortgages. This can lead to lower monthly payments in the first few years. But who is this type of mortgage really for? It might be a good option if:

• You plan to move or refinance within five years. If you don't plan to stay in the home long-term, you may benefit from the lower initial rate without ever having to worry about the rate adjusting.
• You expect your income to increase significantly. If you anticipate a substantial increase in income, you might be comfortable taking on the risk of a potentially higher rate after the initial period.
• You believe interest rates will fall. If you think rates will decrease in the future, you might be willing to gamble that your rate will adjust downward. While these situations are a good fit, the latter scenario of anticipating interest rates to fall is risky and requires an indepth calculation.

The Risks to Consider: ARM Yourself with Knowledge

While a 5-year ARM can be attractive, it's important to be aware of the potential downsides:

• Interest Rate Risk: The biggest risk is that your interest rate could increase after the fixed period. Nobody has a crystal ball, the risk of the benchmark increasing is very real, and your monthly payments could go up significantly. This leads to many homeowners losing thier homes to foreclosure.
• Complexity: ARMs can be more complex than fixed-rate mortgages, with terms like “index,” “margin,” and “caps.” Make sure you fully understand how the rate adjustment works before signing on the dotted line.
• Refinancing Costs: If rates rise and you want to switch to a fixed-rate mortgage, you'll have to pay refinancing costs, which can eat into any initial savings you got from the ARM.

Insights and My Take

In my opinion, a 5-year ARM can be a powerful financial tool in the right circumstances. The key is to carefully assess your risk tolerance, your financial situation, and your long-term plans. Don't just jump on the bandwagon because the rate is lower today.

Also, don't treat the initial savings as “free money.” Instead, use that extra cash flow wisely, whether it's paying down other debts, investing for the future, or building up a larger emergency fund. That way, you'll be better prepared if your rate does adjust upward.

Finally, shop around! Don't settle for the first offer you get. Talk to several lenders, compare rates and terms, and don't be afraid to negotiate.

Beyond the 5-Year ARM: The Broader Mortgage Market

While the 5-year ARM grabbed the headlines today, it's important to put it in perspective. Here's a quick look at what's happening with other mortgage rates:

• 30-Year Fixed Rate: Remains relatively stable at 6.79%, unchanged from the previous week. This is still the most popular choice for homebuyers who value stability and predictability.
• 15-Year Fixed Rate: Increased slightly to 5.86%. You'll pay less interest. The caveat is that your monthly payment is higher than the 30 Year Fixed Rate payment.
• Other ARMs: 7-year ARM interest rates increased while the 5-year ARM decreased, presenting a unique situation worthy of further exploration from interested buyers.

The Economic Factors Driving Mortgage Rates

Mortgage rates are heavily influenced by a variety of economic factors, including:

• Inflation: When inflation is high, interest rates, including mortgage rates, tend to rise.
• The Federal Reserve (The Fed): The Fed's monetary policy decisions have a significant impact on interest rates across the board.
• Economic Growth: A strong economy can lead to higher interest rates, while a weak economy can lead to lower rates.
• The Bond Market: Mortgage rates are often tied to the yield on the 10-year Treasury bond.

Take Action: What to Do Next

If you're considering a mortgage, whether it's a 5-year ARM or something else, here's what I recommend:

1. Check Your Credit Score: Get a copy of your credit report and dispute any errors.
2. Calculate Affordability: Use an online mortgage calculator to estimate how much you can afford.
3. Get Pre-Approved: Getting pre-approved for a mortgage will give you a better idea of what you can borrow and will make you a more attractive buyer in the eyes of sellers.
4. Shop Around: Compare rates and terms from multiple lenders.
5. Talk to a Professional: Consult with a mortgage broker or financial advisor.

Final Thoughts

The 50-basis-point drop in the 5-year ARM rate presents an interesting opportunity for some homebuyers and homeowners. However, it's not a one-size-fits-all solution. Do your homework, understand the risks, and make an informed decision based on your unique circumstances. And remember, the goal is to find a mortgage that fits your budget and your long-term financial goals, not just to chase the lowest rate.

If you're keeping a close watch on mortgage rates, here's the headline: According to Zillow, as of today, July 4, 2025, the national average for a 5-Year Adjustable Rate Mortgage (ARM) has decreased to 7.71%. This might have you wondering if an ARM is the right choice for you. I'll explain what that means, how it compares to other mortgage types, and why you might (or might not) want to consider it.

Today’s 5-Year Adjustable Rate Mortgage Goes Down to 7.71% – July 4, 2025

Buying a home is one of the biggest financial decisions most of us will ever make. The interest rate on your mortgage has a massive impact on how much you'll ultimately pay for that home. Even a small change in the rate can translate to thousands of dollars over the life of the loan. That's why staying informed about current rates is so critical before you start house hunting or refinance your existing mortgage.

What's Happening with Mortgage Rates Right Now?

Okay, let’s break down what's been happening with different mortgage rates recently. It's a mixed bag, with some rates going up, some going down, and some staying put. Here's a snapshot:

• 30-Year Fixed Rate Mortgage: Remains relatively stable at 6.80%, a slight increase of 0.01% from the previous week. This is the most popular type of mortgage for a reason: it gives you predictable monthly payments for the next 30 years.
• 15-Year Fixed Rate Mortgage: Increased slightly to 5.86%. This is a good option if you can afford higher monthly payments, allowing you to pay off your house more quickly and save a lot on interest.
• 5-Year ARM: The one we're focusing on! It dipped slightly to 7.71%. It's important to understand how these mortgages work before jumping in.

A Closer Look at the 5-Year Adjustable Rate Mortgage (ARM)

So, what exactly is a 5-year ARM? Here's the deal:

• The “Adjustable” Part: Unlike a fixed-rate mortgage, the interest rate on an ARM can change over time. The “5-year” part means that the initial interest rate is fixed for the first five years of the loan.
• After 5 Years: Once that initial period is over, the rate will adjust annually based on a specific index (like the Secured Overnight Financing Rate (SOFR)) plus a margin (a fixed number of percentage points the lender adds.) This means your monthly payments could go up or down, depending on where interest rates are at that time.

Why Would Anyone Choose an ARM?

“Why would anyone pick a mortgage that can change?”, if that is the question going through your head, that’s a good question! Here is the reason:

• Lower Initial Rate: ARMs often start with a lower interest rate than fixed-rate mortgages, as we see today. This can make your monthly payments more affordable in the short term.
• Short-Term Plans: If you're planning to move or refinance within the next five years, an ARM could save you money. You'd benefit from the lower initial rate without worrying too much about future adjustments.
• Betting on Rates: Some borrowers believe that interest rates will go down in the future. If they're right, their ARM rate could adjust downward, saving them even more money. It's a gamble, though.

The Risks of an ARM

Of course, there are risks involved:

• Rate Increases: If interest rates rise after the initial fixed-rate period, your monthly payments could jump significantly. This can strain your budget and even put you at risk of foreclosure if you can't afford the higher payments.
• Complexity: ARMs can be more complicated to understand than fixed-rate mortgages. You need to carefully review the loan terms, including the index, margin, and rate caps (limits on how much the rate can increase).

Comparing Mortgage Rates: A Snapshot (July 4, 2025)

To give you a clearer picture, here’s a breakdown of rates for conforming loans as of today:

Program	Rate	1 Week Change	APR	1 Week Change
30-Year Fixed Rate	6.80%	up 0.01%	7.25%	up 0.01%
20-Year Fixed Rate	6.60%	up 0.35%	7.02%	up 0.39%
15-Year Fixed Rate	5.86%	up 0.05%	6.16%	up 0.05%
10-Year Fixed Rate	5.58%	down 0.12%	5.77%	down 0.23%
7-Year ARM	7.63%	up 0.48%	7.84%	up 0.02%
5-Year ARM	7.71%	up 0.24%	8.04%	up 0.11%

What About Other Loan Types?

It’s not just about conventional loans. Government-backed loans like FHA and VA mortgages also have their own rates:

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.67 %	down0.58 %	7.69 %	down0.59 %
30-Year Fixed Rate VA	6.33 %	up0.06 %	6.54 %	up0.06 %
15-Year Fixed Rate FHA	5.34 %	down0.93 %	6.31 %	down0.93 %
15-Year Fixed Rate VA	5.83 %	up0.05 %	6.17 %	up0.05 %

And for those looking at higher-end properties, Jumbo Loans are also an option:

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.12 %	down0.03 %	7.55 %	down0.01 %
15-Year Fixed Rate Jumbo	6.42 %	down0.13 %	6.70 %	down0.10 %
7-year ARM Jumbo	7.42%	0.00%	8.00%	0.00%
5-year ARM Jumbo	7.33%	down0.14%	7.91%	down0.03%

Fixed vs. ARM: Which is Right for You?

The best type of mortgage depends entirely on your individual circumstances. Here’s a quick guide:

• Choose a Fixed-Rate Mortgage If:
  • You want the security of knowing your monthly payments will stay the same.
  • You plan to stay in your home for the long term.
  • You're concerned about interest rates rising in the future.
• Choose an ARM If:
  • You're comfortable with the risk of fluctuating interest rates.
  • You plan to move or refinance within a few years.
  • You believe interest rates will decline in the future.
  • You understand the terms and conditions of the loan completely.

My Take on ARMs

Personally, I tend to be a bit cautious about ARMs. While the lower initial rate can be tempting, the uncertainty of future rate adjustments makes me nervous. I prefer the peace of mind that comes with a fixed-rate mortgage, especially if I plan to stay in a home for a long time. However, that's just my risk tolerance. If you're more comfortable with risk and have a solid financial plan, an ARM could be a good option for you.

Don't Forget the APR!

When comparing mortgage rates, always pay attention to the Annual Percentage Rate (APR). The APR includes not only the interest rate but also other fees and charges associated with the loan. This gives you a more accurate picture of the total cost of borrowing. You can see from the tables above that the APR is always higher than the Rate.

Do Your Homework and Talk to a Lender

Whether you’re leaning towards a fixed-rate mortgage or an ARM, it's crucial to do your research and compare offers from multiple lenders. Talk to a mortgage professional to get personalized advice based on your financial situation and goals. They can help you understand the different loan options and choose the one that's right for you. They can also help you understand all the fine print — which is always important.

The Bottom Line

The drop in the 5-Year ARM rate to 7.71% on July 4, 2025, could be an opportunity for some borrowers. However, it's essential to weigh the risks and benefits carefully before making a decision. Understanding your own financial situation, risk tolerance, and long-term plans is key to choosing the right mortgage for you.

Considering a mortgage in today's market? You're likely seeing some interesting shifts. As of July 2, 2025, the national average for a 5-year Adjustable Rate Mortgage (ARM) has climbed to 7.73%. This is a significant increase and something potential homebuyers – and even current homeowners considering refinancing – need to understand fully.

Let's dive deep into what's driving this increase, how it compares to other mortgage options, and what you should consider before making a decision.

Today’s 5-Year Adjustable Rate Mortgage Soars to 7.73% – July 3, 2025

Let’s start with a snapshot of where different mortgage rates stand as of yesterday, July 3, 2025. This gives us a baseline to understand the relative position of the 5-year ARM.

Loan Type	Rate	Weekly Change	APR	Weekly Change
Conforming Loans
30-Year Fixed Rate	6.79%	Up 0.01%	7.27%	Up 0.03%
20-Year Fixed Rate	6.08%	Down 0.18%	6.56%	Down 0.07%
15-Year Fixed Rate	5.84%	Up 0.03%	6.16%	Up 0.05%
10-Year Fixed Rate	5.58%	Down 0.12%	5.77%	Down 0.23%
7-Year ARM	7.50%	Up 0.36%	7.75%	Down 0.07%
5-Year ARM	7.73%	Up 0.26%	8.09%	Up 0.16%
3-Year ARM	—	0.00%	—	0.00%
Government Loans
30-Year Fixed Rate FHA	6.87%	Down 0.37%	7.90%	Down 0.38%
30-Year Fixed Rate VA	6.30%	Up 0.03%	6.50%	Up 0.02%
15-Year Fixed Rate FHA	5.44%	Down 0.83%	6.41%	Down 0.83%
15-Year Fixed Rate VA	5.79%	Up 0.01%	6.10%	Down 0.01%
Jumbo Loans
30-Year Fixed Rate Jumbo	7.34%	Up 0.19%	7.73%	Up 0.17%
15-Year Fixed Rate Jumbo	6.60%	Up 0.05%	6.84%	Up 0.04%
7-Year ARM Jumbo	7.42%	0.00%	8.00%	0.00%
5-Year ARM Jumbo	7.42%	Down 0.05%	7.92%	Down 0.02%
3-Year ARM Jumbo	—	0.00%	—	0.00%

Source: Zillow

Key Takeaways from this table:

• ARM rates are generally higher than fixed rates: Notice that the 5-year ARM at 7.73% has a higher interest rate than both the 30-year and 15-year fixed-rate mortgages.
• Rate Volatility: Some rates went up, while others went down. This highlights the dynamic nature of the mortgage market and the importance of staying informed.
• Jumbo Loans: While this article primarily focuses on conforming loans, it's worth noting the Jumbo Loan rates. Jumbo loans, which exceed conforming loan limits, often have different rate trends.

Why Are 5-Year ARM Rates So High Right Now?

This is the million-dollar question! Normally, you'd expect shorter-term loans to have lower interest rates than longer-term ones. After all, lenders are taking on more risk when they commit to a fixed rate for 30 years versus just 5. So, why is the 5-year ARM so high?

The main reason is something called an inverted yield curve.

• The Yield Curve: In simple terms, the yield curve is a graph that plots the interest rates (or “yields”) of different U.S. Treasury bonds, from short-term (like 3-month) to long-term (like 30-year).
• Normal Yield Curve: Usually, the yield curve slopes upward. This means longer-term bonds have higher yields than shorter-term ones. This makes sense because investors demand a higher return for locking up their money for a longer period.
• Inverted Yield Curve: An inverted yield curve happens when short-term rates rise above long-term rates. This is unusual and often signals that investors are worried about the near-term economic outlook. They believe that in the future, the central bank will need to cut interest rates to stimulate the economy.

Why does this inversion affect ARM rates?

• ARMs are typically tied to short-term interest rate indices, like the Secured Overnight Financing Rate (SOFR) or the Constant Maturity Treasury (CMT) index.
• Fixed-rate mortgages, on the other hand, are more closely linked to long-term bond yields (specifically the 10-year Treasury yield).

Because of the inverted yield curve, those short-term indices that ARMs are based on are currently higher than the long-term yields that influence fixed-rate mortgages.

Other Factors Influencing Rates:

The inverted yield curve is the primary driver, but other economic factors contribute to the elevated 5-year ARM rate:

• Federal Reserve Policy: The Federal Reserve's monetary policy has a significant impact on interest rates. If the Fed is holding steady on interest rates or hinting at future hikes, it can put upward pressure on short-term rates.
• Inflation Concerns: Lingering concerns about inflation also play a role. If investors believe inflation will remain elevated, they'll demand higher yields on bonds to compensate for the erosion of their investment's purchasing power over time.
• Government Debt: The level of government debt can also influence interest rates. Higher government borrowing can lead to increased supply in the bond market, potentially pushing yields higher.
• Economic Data: Strong economic data can sometimes increase rates, as it suggests the Fed may be less likely to cut rates in the near future.

Is a 5-Year ARM Right for You? Weighing the Pros and Cons

Given the current rate environment, is a 5-year ARM a good choice? It depends a lot on your individual circumstances and risk tolerance. Here's a breakdown to consider:

Potential Advantages (in the right circumstances):

• Lower Initial Rate (Potentially…): I know, I've been saying the 5-year ARM rate is high. But if the yield curve corrects itself and rates come down over the next few years, you could benefit from a lower initial rate compared to a 30-year fixed.
• Short-Term Homeownership: If you only plan to stay in the home for a few years (less than 5), a 5-year ARM could make sense. You'd get the initial rate and potentially sell before the rate adjusts upward.
• Anticipating Rate Decreases: If you firmly believe that interest rates will fall significantly in the next few years, an ARM could allow you to take advantage of those lower rates when the loan adjusts.

Potential Disadvantages (Especially in the current market):

• Rate Risk: This is the biggest concern right now. If rates rise during the adjustment period, your monthly payments could increase significantly.
• Unpredictability: It's hard to predict exactly where interest rates will be in 5 years. Economic conditions can change rapidly.
• Higher Initial Rate right now : In 2025, 5-year ARMs are trading higher than a 30 year fixed rate.

Important Considerations Before Choosing an ARM:

• Your Financial Situation: Can you comfortably afford higher monthly payments if the interest rate on your ARM adjusts upward?
• Your Risk Tolerance: Are you comfortable with the uncertainty of fluctuating interest rates?
• The Loan Terms: Understand the specifics of the ARM, including the adjustment frequency (how often the rate can change), the rate caps (the maximum the rate can increase), and the margin (the amount added to the index to determine your interest rate).

Fixed-Rate Mortgage Alternatives: Weighing Your Options

With the uncertainty in the ARM market, many borrowers are opting for the stability of a fixed-rate mortgage. Here's a quick overview:

• 30-Year Fixed-Rate Mortgage: This is the most popular choice for a reason. It offers payment predictability over the life of the loan. However, you'll typically pay more interest over the long term compared to a shorter-term loan.
• 15-Year Fixed-Rate Mortgage: You'll pay off the loan much faster and save a considerable amount of interest. However, your monthly payments will be higher.
• 20-Year Fxd-Rate Mortgage: A sweet spot between 15 and 30 year loans.

Other Strategies for Navigating the Mortgage Market

• Rate Shopping: Get quotes from multiple lenders. Mortgage rates can vary significantly from one lender to another.
• Improve Your Credit Score: A higher credit score can qualify you for a lower interest rate.
• Increase Your Down Payment: A larger down payment reduces the amount you need to borrow and can also help you qualify for a better rate.
• Consider Government-Backed Loans: FHA and VA loans often have more lenient requirements and lower interest rates than conventional loans.

My Personal Take: Proceed with Caution on ARMs Right Now

Given the current economic uncertainties and the inverted yield curve, I personally believe that most borrowers should exercise caution when considering a 5-year ARM. The risk of rising rates outweighs the potential benefits for many people. The peace of mind that comes with a fixed-rate mortgage is often worth the slightly higher initial rate.

Of course, everyone's situation is different. If you have a strong understanding of the risks and feel comfortable with the potential for rate increases, a 5-year ARM might be a viable option. It's essential to do your research, talk to a qualified mortgage professional, and carefully consider your own financial situation before making a decision.

If you're in the market for a home, you're probably keeping a close eye on mortgage rates. According to Zillow, as of today, July 2, 2025, the national average for a 30-year fixed mortgage is 6.76%, up slightly from yesterday. But the real story is in the 5-year ARM, which has increased 4 basis points to 7.60%. Let's find out what these changes mean for you, why rates are where they are, and what you can expect in the coming months.

Today's 5-Year Adjustable Rate Mortgage Jumps by 4 Basis Points – July 2, 2025

Here's a snapshot of where mortgage rates stand today, compared to last week, according to Zillow:

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.76%	down 0.02%	7.21%	down 0.03%
20-Year Fixed Rate	6.48%	up 0.23%	6.82%	up 0.19%
15-Year Fixed Rate	5.80%	down 0.01%	6.09%	down 0.02%
10-Year Fixed Rate	5.62%	down 0.08%	5.77%	down 0.23%
7-year ARM	7.56%	up 0.42%	7.90%	up 0.08%
5-year ARM	7.60%	up 0.13%	7.98%	up 0.05%
3-year ARM	—	0.00%	—	0.00%

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.88%	down 0.37%	7.90%	down 0.38%
30-Year Fixed Rate VA	6.26%	down 0.01%	6.45%	down 0.03%
15-Year Fixed Rate FHA	5.34%	down 0.93%	6.30%	down 0.94%
15-Year Fixed Rate VA	5.77%	down 0.01%	6.10%	down 0.01%

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.08%	down 0.07%	7.50%	down 0.06%
15-Year Fixed Rate Jumbo	6.50%	down 0.04%	6.79%	down 0.02%
7-year ARM Jumbo	7.42%	0.00%	8.00%	0.00%
5-year ARM Jumbo	7.55%	up 0.08%	8.03%	up 0.09%
3-year ARM Jumbo	—	0.00%	—	0.00%

Why the Focus on the 5-Year ARM?

You might be wondering why I'm highlighting the 5-year ARM. While the 30-year fixed rate is the most popular choice, the 5-year ARM can be a smart option for some borrowers. Here's the deal:

• What is an ARM? An Adjustable-Rate Mortgage (ARM) has an interest rate that's fixed for a certain period (in this case, five years) and then adjusts periodically based on market conditions.
• Who Benefits? ARMs can be attractive if you plan to move or refinance before the fixed-rate period ends. They often start with lower interest rates than fixed-rate mortgages, which can save you money in the short term.
• The Risk: The big risk with an ARM is that your interest rate could increase after the fixed period, making your monthly payments higher. That's why it's crucial to understand how the rate adjusts and what the maximum possible rate could be.

Why Are Mortgage Rates Relatively High in 2025? The Big Picture

It's no secret that mortgage rates aren't as low as they were a few years ago. Here's a breakdown of the key factors driving today's rates:

• Inflation Concerns: While inflation has cooled down from its peak, it's still hovering above the Federal Reserve's target of 2%. This puts upward pressure on interest rates.
• Federal Reserve Policy: The Fed doesn't directly control mortgage rates, but its actions have a big impact. The Fed has been holding steady with its benchmark interest rate to fight inflation. Furthermore, they are shrinking their balance sheet which also increases rates.
• Economic Uncertainty: The global economy is facing a lot of uncertainty, from geopolitical tensions to concerns about economic growth. This uncertainty can lead investors to buy safer assets like US Treasury bonds, which mortgage rates tend to follow.
• Rising Federal Debt: The increasing national debt is also a factor, as it can put upward pressure on interest rates.
• Housing Supply and Demand: While inventory varies by market, in many areas, demand still outstrips supply, keeping prices relatively high. This allows lenders to maintain higher rates.

What Does This Mean for You?

So, how do these factors translate into your home-buying or refinancing decisions?

• For Buyers: The current rate environment means you'll likely pay more in interest over the life of your loan. It's more important than ever to shop around for the best rates and consider different loan options. Don't just focus on the monthly payment; look at the total cost of the loan.
• For Refinancers: If you're hoping to refinance to a lower rate, you might need to be patient. Keep an eye on market trends and consider talking to a mortgage professional to see if refinancing makes sense for you.

Looking Ahead: What's in Store for Mortgage Rates?

Predicting the future of mortgage rates is never easy, but here's what experts are saying for the rest of 2025:

• Fannie Mae Forecast: Fannie Mae predicts that the 30-year fixed-rate mortgage could reach 6.5% by the end of 2025.
• General Consensus: Most experts anticipate a gradual decline in mortgage rates, fueled by a slowing economy and potential interest rate cuts from the Federal Reserve. The general expectation is that rates will be in the mid-to-upper 6% range.

However, it's important to remember that these are just forecasts. Unexpected events could easily change the trajectory of rates.

Stay Informed and Be Prepared

Here's my personal advice based on years of experience:

1. Know Your Credit Score: Your credit score is a major factor in determining your mortgage rate. Check your credit report regularly and take steps to improve your score if needed.
2. Shop Around: Don't settle for the first rate you're offered. Get quotes from multiple lenders to see who can give you the best deal.
3. Consider All Loan Options: Think beyond the 30-year fixed rate. An ARM or a 15-year fixed rate might be a better fit for your financial situation.
4. Factor in All Costs: Remember that the interest rate is just one part of the equation. Consider other costs like closing costs, property taxes, and insurance.
5. Talk to a Professional: A good mortgage broker or lender can help you understand your options and guide you through the process.

Key Takeaway: While the slight increase in the 5-year ARM is worth noting, the broader mortgage market remains dynamic. Stay informed, understand your financial situation, and seek expert advice to make the best decision for your needs.

Navigating the mortgage market can be tricky. But with the right information and a little preparation, you can find a mortgage that works for you. Good luck!