Today’s Mortgage Rates: 5-Year ARM Drops Slightly to 7.84% – July 14, 2025

As of today, July 14, 2025, if you're looking at a 5-year Adjustable Rate Mortgage (ARM), you'll find that the average rate has decreased slightly, dropping from 7.89% to 7.84%. This small dip might be good news for some, but is it the right move for you? Keep reading as I unpack what's happening in the mortgage market and if an ARM could be a smart choice for your situation.

Today’s Mortgage Rates: 5-Year ARM Drops Slightly to 7.84% – July 14, 2025

The world of mortgage rates can seem baffling. Rates fluctuate depending on various scenarios. Keeping up with the changing numbers can feel like doing complicated math homework every day. So, let's break down all the factors that affect today's mortgage rates:

• The Economy: This is the big picture. Is the economy growing? Are people employed? If things are generally looking good, interest rates tend to rise. If things are shaky, rates often drop to encourage borrowing and spending.
• Inflation: One of the biggest drivers of interest rates is inflation. If the prices of everyday goods and services are increasing, it is likely that you'll see your mortgage rate rise, accordingly.
• The Federal Reserve (The Fed): The Fed is like the conductor of the economic orchestra. The Federal Reserve influences the financial markets through its monetary policy in an effort to keep the economy on track.
• The Bond Market: Mortgage rates are closely tied to the bond market, particularly the yield on 10-year Treasury bonds. When bond yields go up, mortgage rates usually follow suit.
• Global Events: Major world events, like a crisis somewhere across the globe, can create uncertainty that impacts financial markets and mortgage rates.

The Current Mortgage Rate Snapshot (July 14, 2025)

Let's take a look at Zillow's data for the current rates across different types of mortgages as of today:

Conforming Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.86%	up 0.02%	7.32%	up 0.03%
20-Year Fixed Rate	6.53%	up 0.06%	6.62%	down 0.29%
15-Year Fixed Rate	5.91%	up 0.03%	6.22%	up 0.04%
10-Year Fixed Rate	6.03%	up 0.25%	6.12%	up 0.14%
7-year ARM	7.74%	up 0.16%	8.22%	up 0.13%
5-year ARM	7.84%	down 0.04%	8.13%	down 0.01%
3-year ARM	—	0.00%	—	0.00%

Government Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.80%	down 0.01%	7.82%	down 0.01%
30-Year Fixed Rate VA	6.30%	down 0.01%	6.52%	0.00%
15-Year Fixed Rate FHA	5.36%	down 0.05%	6.32%	down 0.05%
15-Year Fixed Rate VA	5.82%	down 0.02%	6.17%	0.00%

Jumbo Loans:

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.33%	up 0.10%	7.75%	up 0.10%
15-Year Fixed Rate Jumbo	6.73%	up 0.12%	6.96%	up 0.08%
7-year ARM Jumbo	7.53%	0.00%	7.70%	0.00%
5-year ARM Jumbo	7.38%	down 0.04%	7.87%	down 0.04%
3-year ARM Jumbo	—	0.00%	—	0.00%

The Slight Dip in 5-Year ARM: What Does It Mean?

The 5-Year ARM is currently sitting at 7.84%, a decrease of 5 basis points from last week. While a small dip in rates is generally positive, it's important to remember that ARMs come with their own set of considerations. Understanding how these loans work is vital before jumping in.

What is an Adjustable Rate Mortgage (ARM)?

Unlike a fixed-rate mortgage, where the interest rate remains the same for the life of the loan, an ARM has an interest rate that can change periodically. The 5-year ARM means that your initial interest rate is fixed for the first five years, after which it adjusts annually based on prevailing market conditions.

Why the Initial Attraction?

• Lower Initial Rate: ARMs often start with a lower interest rate than fixed-rate mortgages. This can translate to lower monthly payments in the first few years, freeing up cash for other expenses.
• Potential for Savings: If interest rates decrease during the adjustment period, your mortgage rate (and therefore your monthly payment) could go down. This can save you a significant amount of money over the life of the loan.

The Potential Downsides

• Rate Increases: The biggest risk with an ARM is that interest rates could rise. If rates go up significantly when your loan adjusts, your monthly payments could become substantially higher.
• Uncertainty: With an ARM, it's difficult to predict your future monthly payments. This uncertainty can make it harder to budget and plan your finances.
• Complexity: ARMs can be more complex than fixed-rate mortgages. It's important to understand the terms of your loan, including how often the rate adjusts, the caps on interest rate increases, and the index used to calculate the new rate.

Is a 5-Year ARM Right for You? Some Personal Thoughts

Here's my take on whether a 5-year ARM might be a good fit for you:

• Short-Term Homeownership Plans: If you plan to move or refinance within the next five years, an ARM could be a smart move. You can take advantage of the lower initial rate without worrying too much about future rate increases.
• Expecting Income Growth: If you anticipate your income increasing significantly in the next few years, you might be more comfortable with the risk of a potential rate hike. My experience tells me, however, that relying on future plans is frequently a recipe for disaster. I personally wouldn't take out a mortgage on the strength of a promise down the line.
• Comfortable with Risk: If you're financially disciplined and prepared to handle potential payment increases, an ARM could be a viable option. This is only if you have a solid emergency fund and the ability to absorb higher housing costs, should they arise.

However, consider the following:

• Long-Term Homeownership: If you plan to stay in your home for the long haul, a fixed-rate mortgage might be a better choice. The predictability of a fixed rate can provide peace of mind and protect you from rising interest rates.
• Risk Averse: If you're uncomfortable with the idea of your mortgage payment potentially increasing, a fixed-rate mortgage is likely the way to go. Remember, housing should be a source of comfort, not stress.

The Fed's Impact on Mortgage Rates

The Federal Reserve is the big player influencing these rates. They have been carefully navigating economic crosscurrents.

Recent actions of the Fed regarding economic plans include:

• Rate Cuts Made in Late 2024: The Fed cut rates three times in late 2024 (September to December), reducing the federal funds rate by 1 percentage point to a target range of 4.25%–4.5%, where it has remained through June 2025.
• Two Possible Rate Cuts for 2025: The Fed’s June 2025 meeting reaffirmed plans for two rate cuts in 2025, but policymakers are divided on timing and magnitude.

Final Thoughts: Do Your Homework!

Whether a 5-year ARM is the right choice for you depends entirely on your individual circumstances, financial situation, and risk tolerance. Take some time to carefully evaluate your options, compare rates from different lenders, and consider consulting with a qualified financial advisor. I believe your peace of mind is most important, so choose the path that allows you to sleep soundly at night.