Today’s Mortgage Rates: 5-Year ARM Increases by 3 Basis Points to 7.61%

Feeling confused about the mortgage market? Totally normal! As of July 1, 2025, the 5-year adjustable-rate mortgage (ARM) crept up to 7.61% – a tiny 3-basis-point bump from last week’s 7.58%. Think of it like a slow-rolling hill on a rollercoaster ride. Let’s unpack what this rate wiggle means for buyers, refiners, and the housing market’s vibe. Buying or refinancing is no small move, and these little shifts matter. Your wallet and dream home journey just got a new plot twist – let’s decode it together.

Today's Mortgage Rates: 5-Year ARM Increases by 3 Basis Points to 7.61%

What’s Causing This Rise in 5-Year ARM Rates?

Understanding why 5-Year ARM rates are increasing requires a look at the broader economic environment. Here are factors that could be at play:

• Inflation Expectations: If investors anticipate higher inflation, they will demand higher returns on their investments, including mortgages.
• Federal Reserve Policy: The Federal Reserve (also known as the Fed), by raising or lowering interest rates, has a big impact on mortgage rates. If the Fed believes inflation has not come down enough, they can increase these rates.
• Economic Growth: A strong economy can lead to increased demand for credit, which in turn can push interest rates higher.
• Bond Market Dynamics: Mortgage rates are closely tied to the yield on 10-year Treasury bonds. When Treasury yields rise, mortgage rates tend to follow.
• Market Sentiment: Investor confidence and risk appetite can also influence mortgage rates. Times of uncertainty can cause rates to fluctuate.

Breaking Down the Numbers: A Closer Look at July 1, 2025 Mortgage Rates

Let's take a deeper dive into the numbers reported by Zillow on July 1, 2025. To properly understand what is happening with the 5-Year ARM, it helps to view it in the context of other common mortgage products.

Conforming Loans (Loans that meet specific criteria and can be sold to Fannie Mae or Freddie Mac):

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate	6.73 %	down 0.06%	7.17%	down 0.07%
20-Year Fixed Rate	6.01 %	down 0.25%	6.36%	down 0.27%
15-Year Fixed Rate	5.72 %	down 0.09%	6.01%	down 0.10%
10-Year Fixed Rate	5.62 %	down 0.07%	5.77%	down 0.23%
7-year ARM	7.00 %	down 0.14%	7.91%	up 0.09%
5-year ARM	7.61 %	up 0.15%	7.98%	up 0.05%
3-year ARM	—	0.00 %	—	0.00 %

Government Loans (FHA and VA loans, which are insured by the government):

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate FHA	6.44 %	down 0.81%	7.46%	down 0.82%
30-Year Fixed Rate VA	6.24 %	down 0.04%	6.43%	down 0.05%
15-Year Fixed Rate FHA	5.19 %	down 1.08%	6.15%	down 1.09%
15-Year Fixed Rate VA	5.77 %	down 0.01%	6.09%	down 0.02%

Jumbo Loans (mortgages that exceed conforming loan limits):

PROGRAM	RATE	1W CHANGE	APR	1W CHANGE
30-Year Fixed Rate Jumbo	7.20 %	up 0.05%	7.55%	down 0.01%
15-Year Fixed Rate Jumbo	6.57 %	up 0.02%	6.74%	down 0.07%
7-year ARM Jumbo	7.42 %	0.00 %	8.00%	0.00 %
5-year ARM Jumbo	7.53 %	up 0.05%	7.94%	0.00 %
3-year ARM Jumbo	—	0.00 %	—	0.00 %

Data is current as of July 1, 2025

• Fixed-Rate Mortgages Generally Lower: Most fixed-rate options have decreased in the past week, indicating a potential cooling in fixed rate demand.
• ARM Volatility: Adjustable-rate mortgages show mixed movements. The 5-year ARM is notably up, while the 7-year ARM is down. This variance highlights the unpredictable nature of these products.

How Does This Affect You?

Okay, numbers are great, but what does this actually mean for you? Here’s a breakdown:

• For Homebuyers: If you're considering a 5-Year ARM, this increase means you'll be paying more interest over the initial fixed-rate period. You’ll want to carefully consider if you can comfortably afford potential rate adjustments after those first five years.
• For Those Refinancing: If you have an existing mortgage, now might not be the ideal time to refinance into a 5-Year ARM, especially if your goal is to lower your interest rate for the long term. It’s always wise to assess and see if a fixed rate is a smarter move for you.
• For Current 5-Year ARM Holders: If you already have a 5-Year ARM, pay attention to when your rate will adjust. Start preparing for potential higher payments. It might be wise to explore refinancing options to lock in a fixed rate if you're concerned about future increases.

Think of it like driving a car. A fixed rate is like cruise control; you know exactly what's going to happen. An ARM is more like driving manually; you have to constantly adjust to the road and changing conditions.

5-Year ARM vs. Other Mortgage Options: Which Is Right for You?

Choosing the right mortgage is a deeply personal decision. Here's a comparison to help you weigh your options:

• 5-Year ARM: Great Option if you are planning to move within 5 years or expect a significant increase in income that will offset eventual rate adjustments.
  • Pros: Lower initial interest rate than fixed-rate mortgages, potentially saving money in the short term.
  • Cons: Interest rate can increase after the initial fixed-rate period, leading to higher monthly payments.
• 30-Year Fixed-Rate Mortgage: Ideal if you prioritize stability and long-term predictability.
  • Pros: Predictable monthly payments for the life of the loan, protecting you from rising interest rates.
  • Cons: Higher initial interest rate compared to ARMs, resulting in higher overall interest paid over the long term.
• 15-Year Fixed-Rate Mortgage: Good if you want to pay off your home quickly and save on interest.
  • Pros: Significantly lower interest rates than 30-year mortgages, allowing you to build equity faster.
  • Cons: Higher monthly payments than 30-year mortgages, requiring a larger monthly budget.

  Factors to Consider When Choosing a Mortgage:

• Your Financial Situation: Assess your income, debts, and credit score.
• Your Risk Tolerance: How comfortable are you with the possibility of rising interest rates?
• Your Long-Term Plans: How long do you plan to stay in the home?
• Your Investment Goals: Are you focused on building equity quickly or minimizing monthly payments?

The Fixed-Rate vs. ARM Dilemma: My Personal Thoughts

As someone who has navigated the mortgage market myself, I can tell you that there's no one-size-fits-all answer. If you decide to take on more risk and seek the lower initial costs of an ARM, you need a crystal ball (kidding!). However, what you DO need is enough financial wiggle room that you can breathe easy if things go badly.

Tips for Navigating Today's Mortgage Market

• Shop Around: Don't settle for the first offer you receive. Compare rates and terms from multiple lenders to ensure you're getting the best deal. Even a small difference in interest rates can save you thousands of dollars over the life of the loan.
• Get Pre-Approved: Getting pre-approved for a mortgage gives you a clear understanding of how much you can borrow and strengthens your offer when buying a home.
• Consider Your Credit Score: Your credit score is a huge factor in determining your interest rate. Work to improve your credit score before applying for a mortgage to secure better terms.
• Factor in All Costs: Don't just focus on the interest rate. Consider all the associated costs, such as origination fees, appraisal fees, and closing costs.
• Talk to a Professional: Seek guidance from a qualified mortgage broker or financial advisor. They can help you navigate the complexities of the mortgage market and make informed decisions.

The Bottom Line: Stay Informed and Prepared

The slight increase in the 5-Year ARM rate on July 1, 2025 underscores the dynamic nature of the mortgage market. Whether you're a first-time homebuyer, looking to refinance, or already have an ARM, staying informed about market trends and understanding your options is crucial for making sound financial decisions. Don't be afraid to ask questions, do your homework, and seek professional advice.