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!

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.