Today’s 5-Year Adjustable Rate Mortgage Jumps by 68 Basis Points – June 20, 2025

Are you thinking about buying a home? Or maybe refinancing your existing mortgage? If so, you're probably keeping a close eye on mortgage rates. Today, June 20, 2025, we're seeing some movement in the market, particularly with Adjustable Rate Mortgages (ARMs). According to Zillow, the 5-year Adjustable Rate Mortgage, in particular, has risen significantly, climbing 68 basis points to an average of 7.62%. This means that if you're considering this type of loan, you'll be paying more than you would have just a week ago. Let's break down what's happening and what it might mean for you.

Today's 5-Year Adjustable Rate Mortgage Jumps by 68 Basis Points – June 20, 2025

While the 30-year fixed mortgage rate remains steady at 6.93%, and even the 15-year fixed rate saw a slight decrease to 5.97%, the jump in the 5-year ARM is definitely something to pay attention to. It highlights the dynamic nature of the mortgage market and the factors that influence interest rates.

Here's a quick overview of the key changes as of today:

• 30-Year Fixed: 6.93% (No change from last week)
• 15-Year Fixed: 5.97% (Down 0.03% from last week)
• 5-Year ARM: 7.62% (Up 0.29% from last week)

Digging Deeper: Why the 5-Year ARM Increase Matters

You might be asking, “Okay, so the 5-year ARM went up. Why should I care?” Well, here's the deal: ARMs are different from fixed-rate mortgages. With a fixed-rate mortgage, your interest rate stays the same for the entire loan term (usually 15 or 30 years). With an ARM, the interest rate is fixed for a specific period (in this case, 5 years) and then adjusts periodically based on market conditions.

• Initial Savings: ARMs often start with lower interest rates than fixed-rate mortgages. This can make them attractive to borrowers who are looking to save money on their initial monthly payments.
• Risk of Rate Increases: However, the big risk is that your interest rate can go up after the initial fixed-rate period ends. If interest rates rise significantly, your monthly payments could increase substantially, potentially straining your budget.

Who is Considering ARMs

• First time home buyers
• People expecting to move within five years
• People who believe interest rates will reduce in the future

The Impact on Homebuyers: Is a 5-Year ARM Still a Good Idea?

Given the rise in the 5-year ARM rate, it's crucial to carefully consider whether this type of loan is right for you. Here's what I would advise:

• Assess Your Risk Tolerance: How comfortable are you with the possibility of your mortgage payments increasing in the future? If you're risk-averse, a fixed-rate mortgage might be a better option.
• Consider Your Short-Term Plans: Do you plan to stay in your home for the long term? If you think you might move within the next 5 years, an ARM could be a good way to save money on interest during that time.
• Evaluate Your Financial Situation: Can you afford to make higher mortgage payments if interest rates rise? It's essential to run the numbers and make sure you have enough wiggle room in your budget.

Understanding the Numbers: A Detailed Breakdown of Mortgage Rates

To give you a clearer picture, let's take a closer look at the different types of mortgage rates available today:

Table 1: Conforming Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.93%	0.00%	7.38%	0.00%
20-Year Fixed Rate	6.79%	Up 0.30%	7.14%	Up 0.23%
15-Year Fixed Rate	5.97%	Down 0.03%	6.27%	Down 0.04%
10-Year Fixed Rate	5.87%	Down 0.13%	6.23%	Down 0.04%
7-year ARM	7.56%	Up 0.24%	7.94%	Up 0.02%
5-year ARM	7.62%	Up 0.29%	8.00%	Up 0.14%
3-year ARM	—	0.00%	—	0.00%

Table 2: Government Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	7.63%	Up 0.80%	8.67%	Up 0.82%
30-Year Fixed Rate VA	6.42%	Up 0.02%	6.64%	Up 0.03%
15-Year Fixed Rate FHA	5.63%	Down 0.15%	6.59%	Down 0.16%
15-Year Fixed Rate VA	5.97%	Up 0.04%	6.33%	Up 0.05%

Table 3: Jumbo Loans

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.41%	Up 0.07%	7.80%	Up 0.05%
15-Year Fixed Rate Jumbo	6.82%	Up 0.21%	7.01%	Up 0.14%
7-year ARM Jumbo	7.53%	0.00%	8.06%	0.00%
5-year ARM Jumbo	7.74%	Up 0.02%	8.08%	Down 0.03%
3-year ARM Jumbo	—	0.00%	—	0.00%

Important Considerations Beyond the Interest Rate

• APR (Annual Percentage Rate): Pay close attention to the APR, which includes not only the interest rate but also other fees and costs associated with the mortgage. The APR gives you a more accurate picture of the total cost of the loan.
• Points: Lenders may charge points, which are upfront fees that you pay to lower your interest rate. One point is equal to 1% of the loan amount.
• Closing Costs: Don't forget to factor in closing costs, which can include things like appraisal fees, title insurance, and recording fees.

Looking Ahead: What Could Happen Next?

Predicting the future of mortgage rates is always tricky. Several factors can influence rates, including:

• The Overall Economy: If the economy is strong, interest rates may rise. If the economy is weak, interest rates may fall.
• Inflation: High inflation can lead to higher interest rates.
• Federal Reserve Policy: The Federal Reserve's decisions about interest rates can have a significant impact on mortgage rates.

Ultimately, the best approach is to stay informed, consult with a mortgage professional, and make a decision that aligns with your individual circumstances.

My Final Thoughts:

The rise in the 5-year ARM rate is a reminder that the mortgage market is constantly evolving. Don't let it scare you off from pursuing your homeownership goals, but do take the time to understand the risks and make informed decisions!

Remember, purchasing a home is a huge investment and it is necessary that all options are considered before jumping to any conclusion. And seek professional advice!