Today’s 5-Year Adjustable Rate Mortgage Drops from 7.56% to 7.54% – June 28, 2025

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.