Loan Types

ARM Share Hits Highest Level Since 2025 as Buyers Chase Lower Payments

More buyers are choosing adjustable-rate mortgages, with the ARM share at 11.4% of applications. Here's what you could save and what could go wrong.

By Shivam Kaushik · Updated November 5, 2026 · 4 min read

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The news: adjustable-rate mortgages made up 11.4% of applications in the week ending October 30, 2026, the highest share since September 2025, according to the Mortgage Bankers Association.
Why: the average 5/1 ARM rate was 6.29% versus 7.30% for a 30-year fixed, about a full point cheaper at the start.
The savings: on a $350,000 loan, that gap lowers the starting payment by about $235 a month.
The risk: after five years the rate can reset. If it rose two points, the payment could climb to about $2,586, higher than the fixed loan.

When fixed rates sit above 7%, buyers start looking for a side door. This fall, more of them are choosing the adjustable-rate mortgage, or ARM. The Mortgage Bankers Association’s weekly survey released November 4 showed the ARM share of applications rising to 11.4%, its highest level in more than a year. Here’s what’s driving it, what you could save, and how to tell whether an ARM fits you.

What the MBA survey showed

Measure (week ending Oct 30, 2026)	This week	Prior week
30-year fixed (conforming) rate	7.30%	7.37%
5/1 ARM rate	6.29%	6.41%
15-year fixed rate	6.76%	6.70%
FHA 30-year fixed rate	7.02%	7.12%
ARM share of applications	11.4%	—
Total applications (seasonally adjusted)	-1.2%	—
Purchase applications vs. a year ago	-19%	—

Source: Mortgage Bankers Association Weekly Mortgage Applications Survey (Nov 4, 2026). Rates are contract rates for 80% loan-to-value loans; points not shown.

MBA chief economist Mike Fratantoni noted that activity is still slow even with rates at their lowest since September, and that more borrowers are picking ARMs to lower their first payments. Purchase applications fell 2% for the week and were 19% below a year earlier, while refinance applications were flat at a very low level.

How an ARM works in one paragraph

A 5/1 ARM gives you a fixed rate for the first five years. After that, the rate adjusts, usually once a year, based on a market index plus a set margin. Caps limit how much it can rise at the first reset, at each later reset and over the life of the loan. Our adjustable-rate mortgage guide covers caps and indexes in detail.

The real-dollar comparison

Here’s a $350,000 loan at this week’s MBA averages:

	5/1 ARM at 6.29%	30-year fixed at 7.30%
Monthly principal & interest	$2,164	$2,400
Interest paid in first 5 years	about $106,700	about $124,500
Balance left after 5 years	about $326,800	about $330,500

Over five years the ARM borrower pays about $14,100 less in monthly payments and also owes about $3,700 less at the end. That’s the appeal.

What happens at the reset

Now the part the brochure doesn’t put in bold. After year five, the remaining $326,800 is spread over 25 years at the new rate:

Rate after reset	New monthly payment	vs. fixed at $2,400
6.29% (no change)	$2,164	$236 less
7.29% (+1 point)	$2,371	$29 less
8.29% (+2 points)	$2,586	$186 more
9.29% (+3 points)	$2,808	$408 more

Payments computed by Keys & Coffee. Actual reset rates depend on the index at that time and your loan’s margin and caps.

ExamplePriya expects to move for work in about four years. With a 5/1 ARM she’d likely sell before the first reset and pocket roughly $236 a month in lower payments along the way. Sam, by contrast, plans to stay 15 years. For Sam, the ARM is a bet that rates will be lower in five years, and that bet could cost hundreds a month if it goes wrong.

Myth buster“I’ll just refinance before the ARM resets.” Maybe. But refinancing needs good credit, enough equity, steady income and rates that cooperate, plus closing costs. Treat a refinance as a possible bonus, not the plan. See when to refinance for the math.

Is an ARM right for you? Quick checklist

You’re fairly sure you’ll sell or pay off the loan before the first reset.
You could still afford the payment if the rate rose to the first cap.
You’ve read the loan estimate’s “Adjustable Interest Rate” table showing the maximum possible payment. Our loan estimate guide shows where to look.
You’ve compared it with alternatives like buying points or a seller-paid buydown, using the buydown calculator.

Plug both options into the mortgage calculator and the amortization calculator to see the full picture for your own loan.

Fun factThe “5” in 5/1 is the fixed period in years, and the “1” means it adjusts once a year after that. A 7/6 ARM is fixed for seven years and then adjusts every six months.

What to watch next

Nov 6: October jobs report; Nov 10: October inflation report. Both can move fixed and ARM rates.
Next Wednesday: the next MBA weekly survey shows whether the ARM share keeps climbing.
Dec 8–9: Fed meeting. A hike tends to push short-term rates, which many ARM indexes follow, higher.

FAQ

What is the ARM share of mortgage applications?

It was 11.4% in the week ending October 30, 2026, the highest since September 2025, per the MBA.

How much lower are ARM rates than fixed rates now?

MBA’s average 5/1 ARM rate was 6.29% versus 7.30% for a 30-year fixed, a gap of about one point.

Can an ARM payment go down?

Yes. If the index falls, your rate can drop at a reset, though many loans have a floor that limits how low it goes.

Are ARMs riskier than they were in 2008?

Today’s ARMs generally require full income documentation and come with rate caps, so they’re very different from many pre-2008 products. The payment-shock risk at reset is still real.

Sources: Mortgage Bankers Association Weekly Mortgage Applications Survey (Nov 4, 2026); Freddie Mac Primary Mortgage Market Survey (Nov 5, 2026); Consumer Financial Protection Bureau consumer guides on adjustable-rate mortgages. Payment examples computed by Keys & Coffee. This article is general education, not financial advice. Keys & Coffee is not a lender.

Written by

Shivam Kaushik· IMSHIVA

Founder & Director, QuibbleTech Solutions Pvt Ltd · Editor, Keys & Coffee

Shivam Kaushik is the founder of QuibbleTech Solutions Pvt Ltd and the editor of Keys & Coffee. He is not a licensed loan officer or financial adviser. Every guide here is written in plain English and checked against official sources such as the CFPB, HUD, Fannie Mae, Freddie Mac and the Federal Reserve. For advice on your own loan, talk to a licensed lender.

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Keys & Coffee is an independent education site. We are not a lender or mortgage broker, we do not take loan applications or payments, and nothing here is financial advice. This site is not affiliated with Axia Home Loans, Axia Financial, LLC, or Planet Home Lending. Rates and rules change often — always confirm details with a licensed loan officer and check any lender on the NMLS Consumer Access site.