Latest ARM Mortgage Rate Update for Oct. 27, 2026

If you’re looking to buy a home and don’t mind a mortgage whose interest rate can change over time, an adjustable-rate mortgage may fit your plans. Fixed-rate loans remain the more common option, but ARMs can make sense for buyers who plan to rent out or renovate the property, or for those expecting to move before the fixed-rate period ends and adjustments begin.

Below, we break down how ARMs work, when they may be worth considering instead of a fixed-rate mortgage, and what average rates look like using Mortgage Research Center data.

You can also check the previous business day’s ARM rates report.

Average ARM mortgage rates

Adjustable-rate mortgages come in several forms, depending on how long the initial fixed period lasts and how often the rate resets. A 7/6 ARM, for instance, stays fixed for seven years before adjusting every six months.

Fortune reviewed the most recent MRC data available as of Oct. 26.

Fixed-rate vs. adjustable-rate mortgages

About 92% of households with mortgages choose fixed-rate home loans. Unlike ARMs, which can change after an initial fixed period, fixed-rate mortgages keep the same interest rate for the entire loan term. That predictability helps explain their popularity.

Even so, ARMs can be useful in certain situations. In fact, you may be among the 8% of mortgage borrowers who see an opportunity in this type of loan.

When an adjustable-rate mortgage may make sense

Three types of buyers may want to consider an ARM:

• Short-term or starter-home buyers: If you expect not to stay in the home for long, an ARM can be a practical option. You may benefit from the lower initial rate and sell before the adjustment period starts.
• Real estate investors: Investors may like ARMs for similar reasons. They can lock in a low starting rate, then sell before the loan adjusts or raise rent if rates climb.
• Buyers in high-rate environments: When interest rates are elevated, buyers may turn to ARMs because they can sometimes offer lower introductory rates and may become cheaper later if conditions improve.

How adjustable-rate mortgages work

ARMs begin with a fixed interest rate for a set period, often three, five, seven or 10 years, before moving into an adjustment phase. Once that phase begins, several factors affect how the rate changes:

• Benchmark rates: Many ARMs are tied to benchmarks such as the Secured Overnight Financing Rate, or SOFR, which reflects the borrowing costs banks face. The U.S. Treasury publishes a new SOFR each day.
• Margins: Lenders add a fixed margin to the benchmark rate to determine your ARM’s interest rate. Margins usually fall between 2% and 3.5%, though they vary depending on the loan, the lender and your credit profile.
• Rate caps: Caps limit how much your rate can rise during certain periods or over the life of the loan. These include initial adjustment caps, subsequent caps and lifetime caps.

ARMs commonly have 30-year terms. Typical structures include the 5/1 ARM, which stays fixed for five years before annual adjustments, and the 10/6 ARM, which stays fixed for 10 years before adjusting every six months. Other versions include 3/1, 7/1 and 10/1 ARMs.

Check Out Our Daily Rates Reports

Refinancing from an ARM to a fixed-rate mortgage

If your plans change after taking out an ARM, such as deciding to remain in the home longer than expected, refinancing into a fixed-rate mortgage may be a good option.

Many Millennial and Gen Z homeowners, for example, may find that moving up to a new home is out of reach and instead stay in their starter homes. If the math says staying put is the smartest move for now, you are not alone.

Refinancing from an ARM to a fixed-rate loan works much like refinancing from one fixed-rate mortgage to another. You compare offers from different lenders, submit documentation, close on the new loan and pay off the old one.

If your circumstances change, you can refinance from an ARM to a fixed-rate loan. The process is similar to other mortgage refinances: compare rates, provide paperwork, close on the new loan and pay off the old one.

Pros and cons of adjustable-rate mortgages

Like any mortgage product, ARMs come with advantages and drawbacks. A trusted loan officer can help you decide whether this type of loan is the right fit, but it helps to understand the basics first.

Pros

• Possibility of a lower initial interest rate than a fixed-rate loan.
• Potential for lower monthly payments if rates fall before adjustments begin.
• May come with less strict borrower requirements.

Cons

• Monthly payments can rise after the fixed period ends.
• Complex terms can make rate shopping harder than with fixed-rate loans.
• Offers less long-term stability than a fixed-rate mortgage.