Today’s 5-Year Adjustable Rate Mortgage Jumps by 4 Basis Points – July 2, 2025

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!