Today’s 5-Year Adjustable Rate Mortgage is Down by 5 Basis Points – June 22, 2025

If you're considering a home purchase or refinance, you're likely wondering about the best option for you. As of June 22, 2025, the national average rate for a 5-Year Adjustable Rate Mortgage (ARM) is 7.03%. Let's explore whether a 5-year ARM is an appropriate option for you, considering the current interest rate environment.

Today's 5-Year Adjustable Rate Mortgage is Down by 5 Basis Points – June 22, 2025

Let's dive right in. According to Zillow, here's a snapshot of the key mortgage rates:

• 30-Year Fixed Rate Mortgage: 6.90%
• 15-Year Fixed Rate Mortgage: 5.92%
• 5-Year ARM Mortgage: 7.03%

While the 30-year fixed rate remains a popular choice, the 5-year ARM is also a significant contender, particularly for those who don't plan to stay in their homes for the long haul.

A Closer Look at the 5-Year ARM

So, what exactly is a 5-year ARM? It's a type of mortgage where the interest rate is fixed for the first five years. After this initial period, the rate adjusts annually based on prevailing market conditions. Think of it as a hybrid – a bit of the stability of a fixed-rate mortgage combined with the potential for savings (or risks) of an adjustable-rate mortgage.

The current national average 5-year ARM mortgage rate is down 5 basis points from 7.08% to 7.03%.

To put it simply, the current rate is:

• 7.03% on conforming loans
• 7.65% on Jumbo loans

Why Consider a 5-Year ARM?

There are several reasons why a 5-year ARM might be an attractive option.

• Lower Initial Interest Rate: Typically, ARMs offer lower initial interest rates compared to fixed-rate mortgages. This can translate to significant savings in your monthly payments during the first five years.
• Short-Term Homeownership: If you know you'll only be in the home for a few years, a 5-year ARM could be a great choice. You can take advantage of the lower interest rate during your time there and avoid the risk of rate adjustments.
• Anticipation of Lower Rates: If you believe interest rates will fall in the future, an ARM could be beneficial. When the rate adjusts, it has the potential to decrease, lowering your monthly payments.

The Risks and Considerations of an ARM

It's essential to understand the potential downsides of a 5-year ARM:

• Interest Rate Adjustments: The biggest risk is the uncertainty of future interest rate adjustments. If rates rise, your monthly payments could increase significantly.
• Caps on Adjustments: While ARMs have caps on how much the interest rate can adjust, these caps may not be enough to protect you from a substantial increase in your monthly payments.
• Complexity: ARMs can be more complex than fixed-rate mortgages. It's crucial to understand the terms and conditions of the loan, including how often the rate adjusts, the index it's tied to, and the caps on adjustments.

Comparing Mortgage Rates: A Detailed Breakdown

To help you make an informed decision, let's compare the current mortgage rates for different loan types as of June 22, 2025:

Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.90%	down 0.03%	7.37%	down 0.02%
20-Year Fixed Rate	6.27%	down 0.23%	6.75%	down 0.15%
15-Year Fixed Rate	5.92%	down 0.09%	6.23%	down 0.08%
10-Year Fixed Rate	6.01%	up 0.01%	6.10%	down 0.17%
7-year ARM	7.36%	up 0.03%	7.83%	down 0.09%
5-year ARM	7.03%	down 0.30%	7.73%	down 0.13%
3-year ARM	—	0.00%	—	0.00%

Source: Zillow

Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	7.40%	up 0.57%	8.44%	up 0.58%
30-Year Fixed Rate VA	6.39%	down 0.01%	6.57%	down 0.04%
15-Year Fixed Rate FHA	5.63%	down 0.15%	6.64%	down 0.11%
15-Year Fixed Rate VA	5.89%	down 0.04%	6.18%	down 0.09%

Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.23%	down 0.11%	7.63%	down 0.13%
15-Year Fixed Rate Jumbo	6.45%	down 0.16%	6.72%	down 0.15%
7-year ARM Jumbo	7.53%	0.00%	8.06%	0.00%
5-year ARM Jumbo	7.65%	down 0.07%	8.05%	down 0.06%
3-year ARM Jumbo	—	0.00%	—	0.00%

Is a 5-Year ARM Right for You?

Deciding whether a 5-year ARM is the right choice depends entirely on your individual circumstances. Consider the following questions:

• How long do you plan to stay in the home? If it's less than five years, an ARM could be a good option.
• What is your risk tolerance? Are you comfortable with the possibility of your monthly payments increasing?
• What are your financial goals? Are you prioritizing saving money in the short term or seeking long-term stability?

Fixed vs ARM: Which One Wins?

In the fixed versus ARM debate, there's no universal winner. Both have their pros and cons:

• Fixed-Rate Mortgage: Offers stability and predictability. Your interest rate and monthly payments remain the same for the life of the loan.
• Adjustable-Rate Mortgage: Offers the potential for lower initial interest rates and monthly payments but carries the risk of rate adjustments.

My Final Thoughts and Recommendations

As someone who has navigated the mortgage maze myself, I can tell you that there's no one-size-fits-all solution. I always suggest working closely with a reputable mortgage lender to explore your options and understand the potential risks and rewards. Don't be afraid to ask questions and seek clarification on anything you don't understand.

In conclusion, the 5-year ARM at 7.03% (as of June 22, 2025) can be a strategic financial move if it aligns with your personal circumstances and risk tolerance. Carefully consider your individual situation and consult with a financial professional to make the best decision for your needs.