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

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

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

Why Should You Pay Attention to ARMs?

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

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

For some people, this is a great option:

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

Breaking Down Today's Mortgage Rate News

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

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

Here’s a detailed view of the rates

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

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

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

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

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

Why This Matters to You: ARMs in the Current Market

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

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

My Take on the ARM Landscape

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

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