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!

Feeling confused about the mortgage market? Totally normal! As of July 1, 2025, the 5-year adjustable-rate mortgage (ARM) crept up to 7.61% – a tiny 3-basis-point bump from last week’s 7.58%. Think of it like a slow-rolling hill on a rollercoaster ride. Let’s unpack what this rate wiggle means for buyers, refiners, and the housing market’s vibe. Buying or refinancing is no small move, and these little shifts matter. Your wallet and dream home journey just got a new plot twist – let’s decode it together.

Today's Mortgage Rates: 5-Year ARM Increases by 3 Basis Points to 7.61%

What’s Causing This Rise in 5-Year ARM Rates?

Understanding why 5-Year ARM rates are increasing requires a look at the broader economic environment. Here are factors that could be at play:

• Inflation Expectations: If investors anticipate higher inflation, they will demand higher returns on their investments, including mortgages.
• Federal Reserve Policy: The Federal Reserve (also known as the Fed), by raising or lowering interest rates, has a big impact on mortgage rates. If the Fed believes inflation has not come down enough, they can increase these rates.
• Economic Growth: A strong economy can lead to increased demand for credit, which in turn can push interest rates higher.
• Bond Market Dynamics: Mortgage rates are closely tied to the yield on 10-year Treasury bonds. When Treasury yields rise, mortgage rates tend to follow.
• Market Sentiment: Investor confidence and risk appetite can also influence mortgage rates. Times of uncertainty can cause rates to fluctuate.

Breaking Down the Numbers: A Closer Look at July 1, 2025 Mortgage Rates

Let's take a deeper dive into the numbers reported by Zillow on July 1, 2025. To properly understand what is happening with the 5-Year ARM, it helps to view it in the context of other common mortgage products.

Conforming Loans (Loans that meet specific criteria and can be sold to Fannie Mae or Freddie Mac):

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.73 %	down 0.06%	7.17%	down 0.07%
20-Year Fixed Rate	6.01 %	down 0.25%	6.36%	down 0.27%
15-Year Fixed Rate	5.72 %	down 0.09%	6.01%	down 0.10%
10-Year Fixed Rate	5.62 %	down 0.07%	5.77%	down 0.23%
7-year ARM	7.00 %	down 0.14%	7.91%	up 0.09%
5-year ARM	7.61 %	up 0.15%	7.98%	up 0.05%
3-year ARM	—	0.00 %	—	0.00 %

Government Loans (FHA and VA loans, which are insured by the government):

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.44 %	down 0.81%	7.46%	down 0.82%
30-Year Fixed Rate VA	6.24 %	down 0.04%	6.43%	down 0.05%
15-Year Fixed Rate FHA	5.19 %	down 1.08%	6.15%	down 1.09%
15-Year Fixed Rate VA	5.77 %	down 0.01%	6.09%	down 0.02%

Jumbo Loans (mortgages that exceed conforming loan limits):

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.20 %	up 0.05%	7.55%	down 0.01%
15-Year Fixed Rate Jumbo	6.57 %	up 0.02%	6.74%	down 0.07%
7-year ARM Jumbo	7.42 %	0.00 %	8.00%	0.00 %
5-year ARM Jumbo	7.53 %	up 0.05%	7.94%	0.00 %
3-year ARM Jumbo	—	0.00 %	—	0.00 %

Data is current as of July 1, 2025

• Fixed-Rate Mortgages Generally Lower: Most fixed-rate options have decreased in the past week, indicating a potential cooling in fixed rate demand.
• ARM Volatility: Adjustable-rate mortgages show mixed movements. The 5-year ARM is notably up, while the 7-year ARM is down. This variance highlights the unpredictable nature of these products.

How Does This Affect You?

Okay, numbers are great, but what does this actually mean for you? Here’s a breakdown:

• For Homebuyers: If you're considering a 5-Year ARM, this increase means you'll be paying more interest over the initial fixed-rate period. You’ll want to carefully consider if you can comfortably afford potential rate adjustments after those first five years.
• For Those Refinancing: If you have an existing mortgage, now might not be the ideal time to refinance into a 5-Year ARM, especially if your goal is to lower your interest rate for the long term. It’s always wise to assess and see if a fixed rate is a smarter move for you.
• For Current 5-Year ARM Holders: If you already have a 5-Year ARM, pay attention to when your rate will adjust. Start preparing for potential higher payments. It might be wise to explore refinancing options to lock in a fixed rate if you're concerned about future increases.

Think of it like driving a car. A fixed rate is like cruise control; you know exactly what's going to happen. An ARM is more like driving manually; you have to constantly adjust to the road and changing conditions.

5-Year ARM vs. Other Mortgage Options: Which Is Right for You?

Choosing the right mortgage is a deeply personal decision. Here's a comparison to help you weigh your options:

• 5-Year ARM: Great Option if you are planning to move within 5 years or expect a significant increase in income that will offset eventual rate adjustments.
  • Pros: Lower initial interest rate than fixed-rate mortgages, potentially saving money in the short term.
  • Cons: Interest rate can increase after the initial fixed-rate period, leading to higher monthly payments.
• 30-Year Fixed-Rate Mortgage: Ideal if you prioritize stability and long-term predictability.
  • Pros: Predictable monthly payments for the life of the loan, protecting you from rising interest rates.
  • Cons: Higher initial interest rate compared to ARMs, resulting in higher overall interest paid over the long term.
• 15-Year Fixed-Rate Mortgage: Good if you want to pay off your home quickly and save on interest.
  • Pros: Significantly lower interest rates than 30-year mortgages, allowing you to build equity faster.
  • Cons: Higher monthly payments than 30-year mortgages, requiring a larger monthly budget.

  Factors to Consider When Choosing a Mortgage:

• Your Financial Situation: Assess your income, debts, and credit score.
• Your Risk Tolerance: How comfortable are you with the possibility of rising interest rates?
• Your Long-Term Plans: How long do you plan to stay in the home?
• Your Investment Goals: Are you focused on building equity quickly or minimizing monthly payments?

The Fixed-Rate vs. ARM Dilemma: My Personal Thoughts

As someone who has navigated the mortgage market myself, I can tell you that there's no one-size-fits-all answer. If you decide to take on more risk and seek the lower initial costs of an ARM, you need a crystal ball (kidding!). However, what you DO need is enough financial wiggle room that you can breathe easy if things go badly.

Tips for Navigating Today's Mortgage Market

• Shop Around: Don't settle for the first offer you receive. Compare rates and terms from multiple lenders to ensure you're getting the best deal. Even a small difference in interest rates can save you thousands of dollars over the life of the loan.
• Get Pre-Approved: Getting pre-approved for a mortgage gives you a clear understanding of how much you can borrow and strengthens your offer when buying a home.
• Consider Your Credit Score: Your credit score is a huge factor in determining your interest rate. Work to improve your credit score before applying for a mortgage to secure better terms.
• Factor in All Costs: Don't just focus on the interest rate. Consider all the associated costs, such as origination fees, appraisal fees, and closing costs.
• Talk to a Professional: Seek guidance from a qualified mortgage broker or financial advisor. They can help you navigate the complexities of the mortgage market and make informed decisions.

The Bottom Line: Stay Informed and Prepared

The slight increase in the 5-Year ARM rate on July 1, 2025 underscores the dynamic nature of the mortgage market. Whether you're a first-time homebuyer, looking to refinance, or already have an ARM, staying informed about market trends and understanding your options is crucial for making sound financial decisions. Don't be afraid to ask questions, do your homework, and seek professional advice.

Are you keeping a close eye on mortgage rates? You should be, especially if you're planning to buy a home or refinance soon! As of June 30, 2025, today's mortgage rates show some interesting movement, particularly with the 5-year ARM (Adjustable-Rate Mortgage), which has seen an increase. According to the latest data from Zillow, the national average for a 5-year ARM has risen 2 basis points to 7.62%. Let's dive into what this means for you and the broader housing market.

Today's Mortgage Rates: 5-Year ARM Surges to 7.62% on June 30, 2025

Navigating the world of mortgage rates can feel like trying to solve a complex puzzle. There are so many numbers, terms, and factors that influence where rates are headed. What's a basis point and why should I care that it's “up” or “down”? Let's break it down. A basis point is just one-hundredth of a percentage point (0.01%). So really it's not too complicated once you put it in perspective. Even small changes can add up when you're talking about hundreds of thousands of dollars over the life of a loan.

Fixed vs. Adjustable: Understanding Your Options

The most common types of mortgages are fixed-rate and adjustable-rate.

• Fixed-rate mortgages have an interest rate that stays the same for the entire loan term, which could be 15, 20, or 30 years. This provides stability and predictability in your monthly payments. If you like certainty, or you plan on staying in your new home for a long time, a fixed rate might be right for you.
• Adjustable-rate mortgages (ARMs), on the other hand, have an interest rate that is fixed for an initial period (e.g., 3, 5, 7, or 10 years), and then adjusts periodically based on a benchmark index, such as the Secured Overnight Financing Rate (SOFR) plus a margin (a fixed spread).

The 5-year ARM is just one of many options, and it's crucial to understand the nuances of each to make an informed decision.

The 5-Year ARM: Why the Jump?

Okay, so the 5-year ARM went up slightly. Why? There are a number of influencing factors that can cause mortgage rates to move.

• Economic Data: Strong economic data, such as robust job growth or unexpectedly high inflation, can push rates higher. This is because a strong economy can signal higher demand for credit and potentially lead to the Federal Reserve tightening monetary policy.
• Federal Reserve Policy: The Federal Reserve plays a huge role in setting the overall tone for interest rates. Their decisions on the federal funds rate directly impact short-term borrowing costs, which can then influence mortgage rates.
• Inflation Expectations: If investors expect inflation to rise, they typically demand higher yields on bonds to compensate for the eroding purchasing power of their investment. This, in turn, can lead to higher mortgage rates.
• Global Events: Unforeseen events – wars, geopolitical issues, even natural disasters can affect global financial markets by raising uncertainty causing rates to fluctuate.

While I can't pinpoint the exact reason for the increase on June 30, 2025, it's likely a combination of these factors at play. Even small news items can move the market enough that you will see the change in mortgage rates.

Current Mortgage Rate Snapshot (June 30, 2025)

Let's take a look at a table summarizing the current mortgage rates from ZIllow as of June 30, 2025:

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.75%	down 0.03%	7.21%	down 0.02%
20-Year Fixed Rate	6.05%	down 0.21%	6.31%	down 0.32%
15-Year Fixed Rate	5.74%	down 0.07%	6.05%	down 0.06%
10-Year Fixed Rate	5.78%	up 0.09%	6.04%	up 0.04%
7-year ARM	7.00%	down 0.14%	7.91%	up 0.09%
5-year ARM	7.62%	up 0.16%	8.01%	up 0.08%
3-year ARM	—	0.00%	—	0.00%

Note: APR (Annual Percentage Rate) includes other costs of the loan expressed as a yearly rate.

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	7.25%	up 0.01%	8.29%	up 0.01%
30-Year Fixed Rate VA	6.29%	up 0.02%	6.50%	up 0.02%
15-Year Fixed Rate FHA	5.72%	down 0.55%	6.68%	down 0.56%
15-Year Fixed Rate VA	5.79%	up 0.01%	6.13%	up 0.02%

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.10%	down 0.05%	7.58%	up 0.02%
15-Year Fixed Rate Jumbo	6.45%	down 0.09%	6.74%	down 0.06%
7-year ARM Jumbo	7.42%	0.00%	8.00%	0.00%
5-year ARM Jumbo	7.22%	down 0.25%	7.81%	down 0.13%
3-year ARM Jumbo	—	0.00%	—	0.00%

Key Takeaways from the Table

• 30-year fixed mortgage rates are slightly down at 6.75%, which is good news for those seeking stability.
• 15-year fixed mortgage rates are at 5.74%, making them an attractive option for those looking to pay off their mortgage faster.
• The 5-year ARM is sitting at 7.62%, with an increase of 0.16% from the previous week.
• Notice how Government loans such as FHA and VA loans still have a high demand – this is mostly due to their low down payment options making them accessible to many first-time home buyers giving a leg up to entering the housing market.

Is a 5-Year ARM Right for You?

With the 5-year ARM seeing an uptick, you might be wondering if it's still a viable option. Here are few things to consider. I think these are good pointers to keep in mind which I will share with you:

• Lower Initial Interest Rate: ARMs often start with a lower interest rate than fixed-rate mortgages, making your initial monthly payments more affordable. The question I would ask myself is “Is this a true reflection of affordability?”
• Short-Term Homeownership: If you plan to move or refinance before the adjustment period begins, you could benefit from the lower initial rate. This is especially true if you're only planning on living in the home for the next five or less years.
• Risk Tolerance: Are you comfortable with the possibility of your interest rate increasing after the fixed period? If you can stomach the risk, an ARM might be worth considering.
• Consider the “Worst Case” Scenario: This means evaluating the loan documents and seeing what the maximum interest rate is. Could you afford it?

Personally, I would suggest running different scenarios and talking to a financial advisor before committing to an ARM.

Fixed-Rate vs. ARM: A Detailed Comparison

To help you make a more informed decision, let's compare fixed-rate and adjustable-rate mortgages:

Feature	Fixed-Rate Mortgage	Adjustable-Rate Mortgage (ARM)
Interest Rate	Remains constant throughout the loan term.	Initial rate is fixed for a period, then adjusts based on a benchmark index.
Monthly Payments	Predictable and consistent.	Can fluctuate after the initial fixed period.
Risk Level	Low; no surprises with interest rate changes.	Higher; interest rate can increase or decrease.
Best Suited For	Homeowners who value stability and plan to stay in their home for the long term.	Homeowners who plan to move or refinance within the fixed period, or who are comfortable with interest rate risk.
Initial Interest Rate	Higher compared to ARMs.	Lower than fixed-rate mortgages.

Tips for Navigating the Mortgage Market

The mortgage market can be daunting, but with the right approach, you can find the best loan for your needs:

• Shop Around: Don't settle for the first offer you receive. Get quotes from multiple lenders to compare rates and fees.
• Check Your Credit Score: A good credit score can help you qualify for a lower interest rate. Check your credit report for errors and take steps to improve your score if necessary.
• Get Pre-Approved: Pre-approval gives you a clear idea of how much you can borrow and makes you a more attractive buyer to sellers.
• Understand the Fine Print: Read all loan documents carefully and ask questions about anything you don't understand.

The Bottom Line

While the rise in the 5-year ARM rate on June 30, 2025, might cause some pause, it's important to put it into perspective. Mortgage rates fluctuate constantly, and a slight increase in one type of loan shouldn't necessarily derail your plans of purchasing a home.

Focus on:

• Your individual financial situation
• Long-term goals
• Working with trusted professionals
• Staying informed

By taking a well-informed and pragmatic approach, you can navigate the mortgage market with confidence on your journey towards homeownership.

Buying a home is a huge decision! When interest rates start moving, especially on adjustable-rate mortgages (ARMs), it can feel like navigating a maze. So, let's cut to the chase: According to Zillow, as of June 29, 2025, the average national rate for a 5-Year Adjustable Rate Mortgage has increased from 7.54% to 7.59%.

Today's Mortgage Rates: 5-Year ARM Jumps to 7.59% on June 29, 2025

Mortgage rates are constantly changing. It feels like you need a crystal ball to predict where they're headed next! These fluctuations are based on various economic factors, including inflation, the Federal Reserve's monetary policy, and overall market sentiment. It is important to keep an eye out for the changes so as to reap the benefits.

What's Happening with Mortgage Rates on June 29, 2025?

Let's take a look at the mortgage rates from Zillow as of today.

Loan Program	Rate	1 Week Change	APR	1 Week Change
Conforming Loans
30-Year Fixed Rate	6.76%	Down 0.16%	7.19%	Down 0.18%
20-Year Fixed Rate	6.32%	Down 0.26%	6.67%	Down 0.29%
15-Year Fixed Rate	5.75%	Down 0.21%	6.04%	Down 0.22%
10-Year Fixed Rate	5.78%	Down 0.15%	6.04%	Down 0.03%
7-Year ARM	7.29%	Down 0.15%	7.80%	Down 0.01%
5-Year ARM	7.59%	Up 0.39%	7.96%	Up 0.17%
3-Year ARM	—	0.00%	—	0.00%
Government Loans
30-Year Fixed Rate FHA	7.25%	Down 0.07%	8.30%	Down 0.06%
30-Year Fixed Rate VA	6.26%	Down 0.15%	6.44%	Down 0.16%
15-Year Fixed Rate FHA	5.58%	Down 0.01%	6.55%	Down 0.02%
15-Year Fixed Rate VA	5.73%	Down 0.19%	6.02%	Down 0.22%
Jumbo Loans
30-Year Fixed Rate Jumbo	7.09%	Down 0.18%	7.50%	Down 0.17%
15-Year Fixed Rate Jumbo	6.46%	Down 0.14%	6.71%	Down 0.14%
7-Year ARM Jumbo	7.42%	Down 0.10%	8.00%	Down 0.06%
5-Year ARM Jumbo	7.55%	Down 0.17%	7.94%	Down 0.15%
3-Year ARM Jumbo	—	0.00%	—	0.00%

Key Takeaways from Today's Mortgage Rate Update:

• 30-Year Fixed Mortgage Rates: The most popular 30-year fixed mortgage rate saw a slight increase of 1 basis point, climbing to 6.76%. This is still lower than the previous week’s average of 6.91%.
• 15-Year Fixed Mortgage Rates: The 15-year fixed mortgage rate remained stable at 5.75%.
• 5-Year ARM: This is the focus! The rate increased by 5 basis points, moving from 7.54% to 7.59%.

Diving Deeper: What is an Adjustable-Rate Mortgage (ARM)?

An ARM is a type of mortgage where the interest rate is fixed for an initial period, then adjusts periodically based on a benchmark index. The 5-year ARM has a fixed rate for the first five years. After that, the rate can change, typically annually, based on the market's performance, usually tied to indexes like the Secured Overnight Financing Rate, SOFR.

Why Are ARMs Attractive?

• Lower Initial Interest Rates: ARMs often start with lower interest rates than fixed-rate mortgages. This can result in lower monthly payments during the initial fixed-rate period.
• Ideal for Short-Term Homeownership: If you plan to move or refinance within the first five years, an ARM can be a smart choice. Since you're in the fixed-rate period, you benefit from the lower rate without worrying about adjustments.
• Potential Savings: If interest rates stay low or decrease after the fixed-rate period, you could save money over the life of the loan.

The Risks of ARMs

• Interest Rate Risk: The biggest risk is that interest rates could rise after the fixed-rate period. This would increase your monthly payments, potentially straining your budget.
• Payment Shock: If rates rise significantly, you could face a “payment shock” when your mortgage payment jumps substantially.
• Complexity: ARMs can be more complex than fixed-rate mortgages, making it harder to understand the terms and conditions.

Why Did the 5-Year ARM Rate Go Up?

Several factors could contribute to this increase:

• Economic Conditions: Positive economic data such as strong employment numbers or rising consumer confidence can indicate inflationary pressures, causing interest rates to rise.
• Federal Reserve Policy: The Federal Reserve's decisions on interest rates greatly influence mortgage rates. Any signals of tightening monetary policy usually lead to higher mortgage rates.
• Market Sentiment: Investor confidence and expectations about future economic conditions play a role. If investors anticipate higher inflation, they may demand higher yields on mortgage-backed securities, pushing mortgage rates up.

My Take: Weighing the Pros and Cons

I've seen many people benefit from ARMs over the years, but it's essential to be realistic about your financial situation and risk tolerance. A 5-year ARM can be a good option if the initial rate is substantially lower than a comparable fixed-rate mortgage and if you don't plan to stay in the home for more than five years.

However, I always advise people to consider the worst-case scenario. Can you afford higher monthly payments if interest rates go up significantly? Do you have a plan to refinance or sell the home before the rate adjusts? If you're unsure or uncomfortable with these risks, a fixed-rate mortgage might be a better choice.

Fixed vs. Adjustable: Choosing What's Right for You

Here is a comparison between Fixed Rate Mortgages and ARM

Feature	Fixed-Rate Mortgage	Adjustable-Rate Mortgage (ARM)
Interest Rate	Remains constant throughout the loan term.	Fixed for an initial period, then adjusts periodically.
Payment Stability	Predictable, consistent monthly payments.	Payments can change after the initial fixed-rate period.
Risk Level	Lower risk due to stable payments.	Higher risk due to potential rate increases.
Ideal For	Long-term homeowners who value stability and predictability.	Short-term homeowners or those expecting income growth.
Initial Rate	Can be higher than ARM's initial rate.	Often starts with a lower rate compared to fixed-rate mortgages.
Complexity	Simpler to understand.	More complex due to variable interest rates.

Other Mortgage Rate Trends

While the 5-year ARM saw an increase, it's worth noting that most other mortgage rates experienced slight decreases over the past week:

• 30-Year Fixed Rate: Decreased to 6.76%.
• 15-Year Fixed Rate: Remained steady at 5.75%.

This mixed bag of movements underscores the complexity of the current mortgage market.

The Bottom Line:

The slight increase in the 5-year ARM rate on June 29, 2025, is a snapshot of the ever-changing mortgage market. Stay informed, consider your personal circumstances, and seek expert advice to make smart choices whether you already have a mortgage or are looking to have one. Although the economy may feel like a game of chess, with careful planning and research you can strategically checkmate the perfect deal for you.

Are you thinking about buying a home or refinancing your mortgage? Keeping an eye on mortgage rates is crucial! As of today, June 28, 2025, the national average 5-year Adjustable Rate Mortgage (ARM) has seen a slight decrease, settling at 7.54%. This article will dive into the details of today's mortgage rates, particularly focusing on the significance of this dip in the 5-year ARM, and what it could mean for you.

Today's 5-Year Adjustable Rate Mortgage Drops – June 28, 2025

Mortgage Rate Snapshot:

Let's take a look at where different mortgage rates stand today, according to Zillow's latest update:

• 30-Year Fixed Mortgage Rate: 6.75%
• 15-Year Fixed Mortgage Rate: 5.75%
• 5-Year ARM Mortgage Rate: 7.54%

While the 30-year and 15-year fixed rates remain relatively stable, the slight drop in the 5-year ARM is something to pay attention to. It's a small change, down 2 basis points but in the world of mortgages, every little bit counts! Now, let's explore the bigger picture and dive deeper into ARMs.

Understanding Adjustable Rate Mortgages (ARMs)

Before we get too far ahead, let's quickly review what an Adjustable Rate Mortgage (ARM) actually is. Unlike fixed-rate mortgages, where your interest rate stays the same for the life of the loan, ARMs have an interest rate that can change periodically.

The 5-year ARM is the most common and usually works like this: you get a set interest rate for the initial 5-year period. After those five years are up, the interest rate adjusts, typically once a year, based on a specific index (like the Secured Overnight Financing Rate (SOFR)) plus a margin.

Why the Drop in the 5-Year ARM Matters

While a decrease of 2 basis points might seem insignificant, it can still be meaningful for potential homebuyers.

• Potentially Lower Initial Payments: A lower rate, even slightly lower, can translate to smaller monthly mortgage payments during the initial 5-year period. This can free up cash flow for other expenses or investments.
• Opportunity for Refinancing: Some people take out an ARM hoping that rates will drop in the future, allowing them to refinance into a more stable, long-term fixed-rate mortgage. While it's impossible to predict the future, a lower initial rate gives you some breathing room to wait for the right refinancing opportunity.

However, it's crucial to remember that ARMs come with risk. If interest rates rise after the initial fixed-rate period, your monthly payments could increase significantly.

Who Should Consider a 5-Year ARM?

ARMs aren't for everyone. They are most suitable for borrowers who:

• Plan to Move Soon: If you only plan to stay in the home for a few years before moving, an ARM can be a good option. You'll benefit from the lower initial rate without being exposed to the risk of long-term rate adjustments.
• Expect Their Income to Increase: If you anticipate a significant increase in income in the future, you might be comfortable taking on the risk of potentially higher mortgage payments down the road.
• Are Comfortable with Market Fluctuations: If you understand how interest rates work and are comfortable with the possibility of your mortgage payment changing, an ARM might be a reasonable choice.
• Looking for Lower Interest Rates: When compared to the 30 year fixed interest rate, the interest rate offered by a 5-year ARM is comparatively lower.

It's also very important to remember that if you consider an ARM, you must be disciplined and watch rates very closely so that if the rates start to creep upward, you have ample time to refinance.

A Deeper Dive into Today's Mortgage Rate Trends

Beyond the 5-year ARM, let's examine the broader mortgage rate trends as of June 28, 2025:

Conforming Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.75%	down 0.17%	7.20%	down 0.17%
20-Year Fixed Rate	6.37%	down 0.21%	6.81%	down 0.14%
15-Year Fixed Rate	5.75%	down 0.22%	6.05%	down 0.22%
10-Year Fixed Rate	5.78%	down 0.15%	6.04%	down 0.03%
7-year ARM	7.29%	down 0.15%	7.80%	down 0.01%
5-year ARM	7.54%	up 0.33%	7.97%	up 0.17%
3-year ARM	—	0.00%	—	0.00%

Government Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	7.04%	down 0.28%	8.07%	down 0.29%
30-Year Fixed Rate VA	6.26%	down 0.15%	6.47%	down 0.13%
15-Year Fixed Rate FHA	5.91%	up 0.32%	6.88%	up 0.31%
15-Year Fixed Rate VA	5.74%	down 0.18%	6.09%	down 0.16%

Jumbo Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.13%	down 0.14%	7.50%	down 0.18%
15-Year Fixed Rate Jumbo	6.60%	0.00%	6.83%	down 0.02%
7-year ARM Jumbo	7.42%	down 0.10%	8.00%	down 0.06%
5-year ARM Jumbo	7.33%	down 0.39%	7.85%	down 0.24%
3-year ARM Jumbo	—	0.00%	—	0.00%

Here are a few key observations:

The change in rates vary by program. In comparing those that are fixed to those that are adjustable only underscore the nature of risk and reward to making such a decision.

• Slight Downward Trend: Overall, we're seeing a generally downward trend in mortgage rates across different loan types. This could be influenced by various economic factors, such as inflation, the Federal Reserve's monetary policy, and overall economic growth.
• Government Loans Remain Competitive: VA loans continue to offer attractive rates, especially for eligible veterans. FHA loans also provide an option for borrowers with lower credit scores or smaller down payments.
• Jumbo Loans Still Higher: Jumbo loans, which are for larger loan amounts, typically have higher interest rates than conforming loans.

Factors Influencing Mortgage Rates

Understanding the factors that influence mortgage rates can help you make informed decisions about when to buy or refinance. Here are some of the key drivers:

• The Economy: The overall health of the economy plays a significant role. Strong economic growth can lead to higher interest rates, while a weaker economy may result in lower rates.
  • Inflation: Inflation erodes the purchasing power of money, so lenders demand higher interest rates to compensate for this risk.
  • The Federal Reserve: The Federal Reserve (also known as the Fed) sets monetary policy, which directly impacts interest rates. The Fed can raise or lower the federal funds rate, which influences other interest rates, including mortgage rates.
• The Bond Market: Mortgage rates are often tied to the yield on 10-year Treasury bonds. When bond yields rise, mortgage rates tend to follow suit.
• Investor Sentiment: Investor confidence and risk appetite can also affect mortgage rates. During times of uncertainty, investors may flock to safer assets like Treasury bonds, which can push yields down and lower mortgage rates.
  • Global Events: Major global events, such as geopolitical tensions or economic crises, can also have an impact on mortgage rates.
  • Housing Market Conditions: The forces of supply and demand affecting available homes affects interest rates and affordability.

My Take on the Current Market

Personally, as someone who's followed the housing market for a while, I believe we're in a period of moderate opportunity. While rates aren't at historic lows, the recent dip is a welcome sign for potential homebuyers. However, it's essential to do your homework, compare rates from multiple lenders, and carefully consider your own financial situation before making a decision. Also, be sure to consult with a trusted financial adviser.

Remember, buying a home is a significant financial commitment. Don't rush into it. Take your time, do your research, and make a decision that aligns with your long-term financial goals.

The Bottom Line

Today's slight decrease in the 5-year ARM rate offers a small window of opportunity for some borrowers. However, it's crucial to understand the risks associated with ARMs and carefully weigh your options before making a decision. Stay informed, consult with professionals, and make the choice that's right for you.

Are you thinking about buying a home or refinancing in June 2025? One of the most important things to consider is interest rates for mortgages. As of June 28, 2025, the national average 5-year ARM (Adjustable-Rate Mortgage) rate is 7.49%. This is down 7 basis points from the previous week. But is an ARM right for you? Let's dive into the details.

Current ARM Mortgage Rates for June 28, 2025: What You Need to Know

What is an ARM? Briefly Explained

Before we delve deeper, let's quickly define what an ARM mortgage is. An ARM is a type of mortgage where the interest rate is fixed for an initial period, and then it adjusts periodically based on market conditions. The “5-year ARM” means the rate is fixed for the first five years and can then change annually.

A Snapshot of June 28, 2025 Mortgage Rates

Here's a summary of the mortgage rates as of the latest update provided by Zillow on Saturday, June 28, 2025.

• 30-Year Fixed-Rate Mortgage: 6.73% (down 18 basis points from the previous week)
• 15-Year Fixed-Rate Mortgage: 5.74% (down 1 basis point from the previous week)
• 5-Year ARM: 7.49% (down 7 basis points from the previous week)

It's worth noting that mortgage rates can fluctuate daily, so it's advisable to monitor them closely if you are planning to take out a mortgage soon.

A Detailed Look at ARM Rates

Let's zoom in on ARM mortgage rates in various buckets.

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
7-year ARM	7.29%	down 0.15%	7.80%	down 0.01%
5-year ARM	7.49%	up 0.29%	7.97%	up 0.17%
3-year ARM	—	0.00%	—	0.00%

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
7-year ARM	7.42%	down 0.10%	8.00%	down 0.06%
5-year ARM	7.31%	down 0.41%	7.83%	down 0.26%
3-year ARM	—	0.00%	—	0.00%

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

The big question: should you go with an ARM or a fixed-rate mortgage? Here's how I usually advise people to think about it:

• Fixed-Rate Mortgages: These offer stability and predictability. Your interest rate remains the same for the life of the loan, making it easier to budget. This is a safer pick, especially if you plan to stay in your home for longer.
• ARMs: These can be attractive because they often start with lower interest rates than fixed-rate mortgages. This means lower monthly payments in the initial years. However, the rate can adjust (go up or down) after the initial fixed period, introducing uncertainty. ARMs might be a good option if you:
  • Plan to move or refinance before the rate adjusts.
  • Believe that interest rates will decrease in the future.
  • Can comfortably afford higher payments if the rate increases.

Here's a quick comparison table:

Feature	Fixed-Rate Mortgage	Adjustable-Rate Mortgage (ARM)
Interest Rate	Fixed for the life of the loan	Adjusts after initial fixed period
Monthly Payment	Predictable and consistent	Can change after the initial fixed period
Risk	Lower risk, predictable costs	Potentially higher risk due to rate adjustments
Best For	Long-term homeowners, risk-averse buyers	Short-term homeowners, rate decrease believers

Factors Influencing ARM Rates

Several factors impact ARM rates. Understanding these can help you make more informed decisions.

• The Prime Rate: This is the interest rate that banks charge their best customers. ARM rates are often tied to the prime rate, so when the prime rate goes up or down, ARM rates tend to follow.
• The Federal Reserve (The Fed): The Fed sets the federal funds rate, which influences borrowing costs across the economy, including mortgage rates.
• Inflation: When inflation is high, interest rates tend to rise to compensate lenders for the decreased purchasing power of future payments.
• Economic Growth: A strong economy often leads to higher interest rates as demand for borrowing increases.
• Global Events: Major global events, such as economic crises or geopolitical instability, can impact financial markets and influence interest rates.

Expert Advice:

It's not enough to say interest rates are trending one way or the other. It also helps to consider the broader picture. Are jobs being added to the economy? Are average wages going up? What is the unemployment rate? Are US treasuries yielding a greater ROI than real estate? These are some of the more important things to consider when trying to assess the current and future state of mortgage rates.

Tips for Securing the Best ARM Rate

If you're leaning toward an ARM, here are some tips to increase your chances of getting a favorable rate:

• Improve Your Credit Score: A higher credit score typically qualifies you for lower interest rates. Review your credit report and address any errors or outstanding debts.
• Save for a Larger Down Payment: A larger down payment reduces the amount you need to borrow, which can result in a lower interest rate.
• Shop Around: Don't settle for the first offer you receive. Compare rates from multiple lenders to find the best deal.
• Negotiate: Don't be afraid to negotiate with lenders. They may be willing to offer a lower rate to earn your business.
• Consider Rate Caps: ARM loans often have rate caps that limit how much the interest rate can increase during each adjustment period and over the life of the loan. Understanding these caps can help you manage potential risks.

Looking Ahead: What's Expected for Mortgage Rates?

Predicting future mortgage rates is challenging, but here's what to consider:

• Economic Forecasts: Pay attention to economic forecasts from reputable sources, such as the Federal Reserve, major banks, and financial analysts. These forecasts often include predictions about economic growth, inflation, and interest rates.
• Fed Policy: Keep an eye on the Federal Reserve's monetary policy decisions. Any changes to the federal funds rate can have a significant impact on mortgage rates.
• Market Trends: Monitor trends in the bond market, as mortgage rates often track the yield on 10-year Treasury bonds.

Mortgage rates are constantly changing, and it's crucial to stay informed to make the best financial decisions. Whether you opt for a fixed-rate mortgage or an ARM, understanding the current market conditions, your financial situation, and your long-term goals is key.

Navigating the world of mortgages can feel like trying to decipher a secret code. Among the various options, the 5-Year Adjustable Rate Mortgage (ARM) stands out as a unique choice. According to Zillow, as of today, June 27, 2025, the national average 5-year ARM mortgage rate is at 7.54%. This article will help dive deep into the 5-year ARM, its implications, and whether it's the right fit for your financial journey. Let's get started!

Today's 5-Year Adjustable Rate Mortgage Drops Slightly to 7.54% – June 27, 2025

Understanding the 5-Year Adjustable Rate Mortgage (ARM)

An Adjustable Rate Mortgage isn't as scary as it sounds. Essentially, it's a home loan with an interest rate that's fixed for a specific period (in this case, five years) and then adjusts periodically based on market conditions. This is different from a fixed-rate mortgage, where the interest rate remains the same throughout the life of the loan.

How does it work?

The 5-year ARM has two distinct phases:

• Initial Fixed-Rate Period: For the first five years, your interest rate remains constant. This provides predictability in your monthly mortgage payments during this period.
• Adjustment Period: After the initial five years, the interest rate adjusts at predetermined intervals (usually annually) based on a benchmark interest rate (like the Prime Rate or the LIBOR, though LIBOR will likely be replaced). The margin (a fixed percentage added to the index) is added to determine the new interest rate.
  • For instance, if the benchmark is 3% and the margin is 2.75%, the adjusted interest will be 5.75%.

The Current Mortgage Rate Environment: June 27, 2025

Before diving deeper into ARMs, let's set the stage with a snapshot of the current mortgage rates on June 27, 2025 (Zillow Data):

Loan Program	Rate	1-Week Change	APR	1-Week Change
30-Year Fixed Rate	6.74%	Down 0.17%	7.20%	Down 0.17%
15-Year Fixed Rate	5.74%	Down 0.22%	6.04%	Down 0.22%
5-Year ARM	7.54%	Up 0.34%	7.96%	Up 0.17%

It's evident that while fixed-rate mortgages might be trending slightly down, the 5-year ARM has seen a slight increase in the past week. It is extremely important to note the rate, APR and week's change for various mortgage products before making an informed decision.

Advantages of Choosing a 5-Year ARM

Okay, so why would anyone choose an ARM over the stability of a fixed-rate mortgage? Here are some compelling reasons:

• Lower Initial Interest Rate: Historically, ARMs often start with a lower interest rate compared to fixed-rate mortgages. This translates to lower monthly payments during the initial fixed-rate period.
• Ideal for Short-Term Homeowners: If you plan to sell or refinance your home within five years, you can capitalize on the lower rate without experiencing any interest rate adjustments (this is the biggest reason for choosing a 5-year ARM).
• Potential for Lower Rates During the Adjustment Period: If interest rates fall or remain stable during the adjustment period, your mortgage rate could decrease, leading to even lower monthly payments.
• Suitable for Those Expecting Income Growth: If you anticipate a significant increase in your income in the future, you might be comfortable with the risk of a potential rate increase because you'll be better equipped to handle larger payments.

The Risks and Downsides of a 5-Year ARM

It's crucial to acknowledge the potential pitfalls associated with 5-year ARMs:

• Interest Rate Risk: The primary risk is the possibility of your interest rate increasing during the adjustment period. If interest rates rise significantly, your monthly payments could become unaffordable.
• Rate Caps and Floors: Most ARMs have rate caps, limiting how much the interest rate can increase at each adjustment and over the life of the loan. However, even with caps, substantial increases are possible. Floors limit how low the interest rate can go should the market crash.
• Complexity: ARMs can be more complex to understand than fixed-rate mortgages. You need to consider the index, margin, adjustment frequency, and rate caps and floors.
• Refinancing Costs: If rates start to rise, you might consider refinancing into a fixed-rate mortgage, but this entails additional costs like appraisal fees, origination fees, and title insurance.
  • “I've seen people gamble on ARMs, hoping rates would stay low, only to be caught off guard when they jumped. It's a risk you have to weigh carefully,” I always advised my clients”.

Who is a 5-Year ARM Right For?

Here's a breakdown of situations where a 5-year ARM might be a smart choice:

• First-Time Homebuyers with Short-Term Plans: If you're buying your first home as a starter property and plan to upgrade within a few years, a 5-year ARM can offer lower initial payments.
• Real Estate Investors: Investors who buy, renovate, and flip properties often use ARMs because they typically have a short investment timeline. They are betting on the property value increasing in the short term.
• Borrowers Expecting Rising Income: As mentioned earlier, if you anticipate a significant increase in income, you may be able to handle potential rate adjustments.
• Those Comfortable with Risk: If you have a high risk tolerance and believe that interest rates will remain stable or decrease, you might be willing to take a chance on an ARM.

Who Should Avoid a 5-Year ARM?

Conversely, here are scenarios where a 5-year ARM might not be the best option:

• Risk-Averse Borrowers: If you value stability and predictability in your mortgage payments, a fixed-rate mortgage is a safer bet. An ARM can cause sleepless nights if rates are volatile.
• Those Planning to Stay in the Home Long-Term: If you plan to live in the home for more than five years, you'll eventually face interest rate adjustments, which could disrupt your budget.
• Borrowers with Tight Budgets: If you have a limited budget and can barely afford the initial payments, a potential rate increase could push you into financial distress.
• Those Unfamiliar with Financial Markets: If you don't understand how interest rates work and are uncomfortable with market fluctuations, it's best to steer clear of ARMs.

Key Factors to Consider When Evaluating a 5-Year ARM

Ready to make a decision? Here are the crucial factors to consider:

• Interest Rate Caps: Understand the initial rate cap, the periodic rate cap (the maximum increase at each adjustment), and the lifetime rate cap (the maximum the interest rate can rise over the life of the loan).
• The Index and Margin: Know which index the ARM is tied to (e.g., Prime Rate). The margin is the fixed percentage added to the index to determine the interest rate.
• Recession: How would a global or country-level recession affect your ability to be able to deal with rising mortgage payments?
• Adjustment Frequency: Determine how often the interest rate will adjust (e.g., annually, semi-annually).
• Prepayment Penalties: Check if there are any penalties for paying off the mortgage early or refinancing.
• Your Financial Situation: Assess your income, credit score, debt-to-income ratio, and overall financial stability.
• Market Conditions: Research current and projected interest rate trends. Consult with a financial advisor to get expert opinions. However, remember that no one has a crystal ball.

Comparing 5-Year ARMs with Other Mortgage Options

Let's briefly compare the 5-year ARM with other popular mortgage types:

Mortgage Type	Interest Rate	Payment Stability	Best For
5-Year ARM	Lower Initial	Variable	Short-term homeowners, investors, risk-takers
30-Year Fixed Rate	Higher	Stable	Long-term homeowners, risk-averse individuals
15-Year Fixed Rate	Moderate	Stable	Those wanting to pay off their mortgage quickly

Final Thoughts: Is the 5-Year ARM Right for You?

On June 27, 2025, the 5-year ARM presents both opportunities and risks. The rate of 7.54% might be attractive if you're looking for lower initial payments, but it's important to weigh this against the potential for future rate increases.

Ultimately, the decision of whether to choose a 5-year ARM depends on your individual circumstances, financial goals, and risk tolerance. Consider your options carefully, do your research, consult with a mortgage professional (or several!), and make the choice that's best for you. After all, your home is one of the biggest investments for your life, so take calculated risks!

Are you in the market for a new home or considering refinancing? If so, keep a close eye on mortgage rates! According to Zillow, the 5-year Adjustable Rate Mortgage (ARM) has seen a significant jump today, June 26, 2025, increasing by 15 basis points to 7.71%. This increase could impact your affordability and overall borrowing strategy; let's dive into what this means for you.

Today's 5-Year Adjustable Rate Mortgage Takes a Big Jump of 15 Basis Points – June 26, 2025

Mortgage rates are constantly in flux, influenced by a myriad of economic factors. While the 30-year fixed rate is considered the benchmark, other loan products like ARMs provide different options that can be advantageous depending on your circumstances.

Here’s a snapshot of how various mortgage rates are behaving today:

• 30-Year Fixed Rate: Down 1 basis point to 6.81%
• 15-Year Fixed Rate: Down 2 basis points to 5.85%
• 5-Year ARM: Up 15 basis points to 7.71%

This mixed bag of movements suggests that while long-term borrowing costs are slightly decreasing, shorter-term adjustable rates are heading in the opposite direction, potentially raising concerns for borrowers banking on rate stability.

Why the Sudden Jump in the 5-Year ARM Rate?

Several factors could be contributing to this uptick. Here are some potential drivers:

• Shifts in the Yield Curve: The yield curve, reflecting the difference between short-term and long-term treasury yields, influences mortgage rates. A steepening curve might signal higher inflation expectations, pushing ARM rates up.
• Federal Reserve Actions: While the Fed doesn’t directly set mortgage rates, its monetary policy decisions impact the broader interest rate environment. Any signals of tightening could lead to increases in ARM rates.
• Investor Sentiment: Demand for mortgage-backed securities (MBS), which bundle mortgages together, also plays a role. If investors are less willing to buy MBS due to perceived risk, lenders may increase rates to compensate.
• Economic Data Releases: Strong economic reports suggesting robust growth may encourage lenders to increase the rates they offer.

Comprehensive Mortgage Rate Overview (June 26, 2025)

To give you a complete picture, here's a detailed table comparing different loan types and their current rates from Zillow:

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.81%	down 0.10%	7.25%	down 0.13%
20-Year Fixed Rate	6.65%	up 0.07%	6.94%	down 0.01%
15-Year Fixed Rate	5.85%	down 0.11%	6.13%	down 0.13%
10-Year Fixed Rate	5.85%	down 0.08%	6.04%	down 0.03%
7-year ARM	7.44%	0.00%	8.02%	up 0.20%
5-year ARM	7.71%	up 0.51%	7.98%	up 0.18%
3-year ARM	—	0.00%	—	0.00%

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.88%	down 0.45%	7.91%	down 0.46%
30-Year Fixed Rate VA	6.29%	down 0.12%	6.51%	down 0.10%
15-Year Fixed Rate FHA	5.63%	up 0.03%	6.59%	up 0.03%
15-Year Fixed Rate VA	5.84%	down 0.08%	6.20%	down 0.05%

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.28%	up 0.01%	7.73%	up 0.06%
15-Year Fixed Rate Jumbo	6.95%	up 0.35%	7.27%	up 0.42%
7-year ARM Jumbo	7.42%	down 0.10%	8.00%	down 0.06%
5-year ARM Jumbo	7.71%	down 0.01%	8.02%	down 0.07%
3-year ARM Jumbo	—	0.00%	—	0.00%

What This Means for Homebuyers and Refinancers

The rate hike on the 5-year ARM has several implications:

• Higher Initial Payments: Borrowers opting for a 5-year ARM will face higher initial monthly payments compared to the rate environment just yesterday. The initial attraction to ARM’s comes from a lower initial interest when compared to fixed mortgages but is diminished as the rates go up in subsequent years
• Increased Risk: ARMs come with the risk that interest rates could rise after the initial fixed-rate period, potentially leading to significant increases in monthly payments. This risk needs careful consideration.
• Impact on Affordability: For potential homebuyers, especially those on a tight budget, the higher ARM rate could reduce the amount they can borrow or qualify for.
• Refinancing Considerations: Homeowners considering refinancing from a fixed-rate mortgage to an ARM need to weigh the potential savings against the risk of future rate increases.

Is an ARM Still the Right Choice?

Even with the rate increase, an ARM could still be a suitable option for certain borrowers:

• Short-Term Homeowners: If you plan to move or refinance within the next five years, an ARM might offer lower rates during your ownership period.
• Expectation of Decreasing Rates: Some borrowers might believe that interest rates will decline in the future, making an ARM a potentially beneficial bet. I would suggest not trying to time the market for that reason as there is no surety.
• Financial Flexibility: If you have the flexibility to absorb potential rate increases, an ARM could still save you money in the short term. Flexibility here refers to that you should be ready in case the interest surges to a point you are not able to afford anymore to offset the monthly liability.

Fixed-Rate Mortgages: A Safe Haven?

While ARMs flirt with potential savings and risks, fixed-rate mortgages offer stability, especially now. With rates for 30-year and 15-year fixed mortgages showing slight decreases, they could be an attractive alternative for those seeking predictability in their monthly payments. The current 30-year fixed rate sits at 6.81%, a good option for stability in the long run.

Strategies to Navigate the Current Mortgage Rate Climate

• Shop Around: Don't settle for the first rate you see. Get quotes from multiple lenders to find the best deal.
• Improve Your Credit Score: A higher credit score can result in lower interest rates. Work on paying bills on time and reducing your debt.
• Increase Your Down Payment: A larger down payment reduces the loan amount and could qualify you for a lower rate.
• Consider Points: Paying points upfront can lower your interest rate. Calculate whether the upfront cost is worth the long-term savings.
• Consult a Mortgage Professional: A mortgage broker can guide you through the options and help you make an informed decision.

The Bottom Line: Stay Informed and Adapt

The mortgage market is dynamic, and rates can change quickly. Staying informed about the latest trends and understanding how they impact your financial situation is crucial. Whether you're a first-time homebuyer, a seasoned homeowner looking to refinance, or an investor, careful planning and a well-thought-out strategy are essential to securing the best possible mortgage terms.

I'd advise approaching any mortgage decision with caution and diligence. Understanding your risk tolerance, financial goals, and the potential impact of rate changes is key to making the right choice for your future.