Although fixed-rate home loans are considerably more common than variable-rate mortgages, the latter merit thought if you can handle some unpredictability. This is due to the fact that an ARM might provide a reduced interest rate during its initial phase before changes begin—rendering this borrowing option potentially appealing for individuals intending to lease out or quickly resell the real estate they're acquiring, or those who anticipate relocating prior to the conclusion of the introductory term.
TL;DR
- ARM mortgage rates for December 5, 2025, show Bank of America at 5.625% interest.
- U.S. Bank offers a 7/6 ARM at 5.875% interest, while Zillow Home Loans is at 6.250%.
- ARMs may offer lower initial rates, appealing to short-term owners or investors.
- ARMs have variable rates after an introductory period, unlike stable fixed-rate loans.
We'll stay with you as we explain ARMs, examine situations where they might be a better choice than a standard fixed-rate loan, and review current ARM interest rates from several leading financial institutions.
You can see the previous business day’s ARM rates report here.
ARM mortgage rates from leading lenders
As of December 4th, Coins2Day examined the latest figures. The institutions supplied these example rates. Each is founded on particular suppositions concerning a hypothetical borrower's credit standing and geographic area. Projections might incorporate an assumption of mortgage discount points. Should you decide to proceed with an application, be aware that the actual rate you obtain could differ from the sample rates presented.
| Bank of America 7/6 ARM | U.S. Bank 7/6 ARM | Zillow Home Loans 7/6 ARM | |
|---|---|---|---|
| Interest Rate | 5.625% | 5.875% | 6.250% |
| APR | 6.381% | 6.471% | 6.671% |
| Interest Rate | |
|---|---|
| Bank of America 7/6 ARM | 5.625% |
| U.S. Bank 7/6 ARM | 5.875% |
| Zillow Home Loans 7/6 ARM | 6.250% |
| APR | |
| Bank of America 7/6 ARM | 6.381% |
| U.S. Bank 7/6 ARM | 6.471% |
| Zillow Home Loans 7/6 ARM | 6.671% |
A 7/6 ARM is one with a fixed rate for seven years, then adjustment periods every six months.
Fixed-rate versus adjustable-rate home loans
Approximately 92% of all mortgages in the U.S. Are fixed-rate home loans, underscoring their dependability. In contrast to adjustable-rate mortgages (ARMs), which can alter interest rates following an introductory phase, fixed-rate mortgages secure a single rate throughout the loan's duration. This consistent nature makes them a desirable choice for numerous borrowers.
Nevertheless, ARMs could present advantages in particular circumstances. Ultimately, roughly 8% of individuals choose them instead of the more prevalent fixed-rate mortgages.
When you might think about a mortgage with a fluctuating interest rate
Three types of buyers may favor ARMs:
- Short-term homeowners: Should moving be probable within a short timeframe, adjustable-rate mortgages could provide financial benefits with their initial low rates, assuming you relocate before subsequent changes become an issue. However, consider thoroughly whether you'll realistically be able to leave your first residence as soon as you plan.
- Property investors: Investors may leverage ARMs for a low initial rate, then may flip the home before adjustment periods kick in or may increase rent during periods of higher interest rates if they’re renting out the property.
- Buyers facing elevated interest levels: When interest rates are elevated, Adjustable-Rate Mortgages (ARMs) could present a more favorable rate initially and possibly see further rate decreases later on if the market shifts favorably.
Understanding the mechanics of adjustable-rate mortgages
Adjustable-rate mortgages typically commence with a period of three to 10 years where the interest rate remains constant, subsequently transitioning into phases where it can change. Throughout these adjustment phases, your interest rate will be affected by elements such as:
- Benchmark indices like SOFR: Your ARM is generally linked to a benchmark, frequently SOFR. This rate indicates the expense for financial institutions to obtain funds on a daily basis. The U.S. Treasury issues a new SOFR every morning.
- Margins added by lenders: Margins are fixed percentages, which can often range between 2% and 3.5%, added by lenders to whatever benchmark is used for your ARM. The benchmark plus the margin helps determine your mortgage rate. These can vary based on things like your specific lender and your credit profile.
- Rate caps: Adjustment caps limit how much your rate can increase during specific intervals or over the loan’s lifetime. These can include initial, subsequent, and lifetime caps.
Typical Adjustable-Rate Mortgage (ARM) configurations feature the 5/1 ARM, which involves a five-year fixed-rate period followed by yearly rate changes, and the 10/6 ARM, offering a decade of fixed rates before adjustments occur every six months. Additional ARM arrangements consist of 3/1, 7/1, and 10/1 ARMs.
Learn more: Why the Secured Overnight Financing Rate might matter for your mortgage.
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Transitioning from an adjustable-rate mortgage to a loan with a set interest rate
Circumstances can shift. Perhaps you acquired a property with the intention of reselling it quickly, only to discover it was a suitable place for you to live long-term. Alternatively, you might have purchased an initial dwelling and then found that your relocation plans wouldn't materialize as swiftly as anticipated. If you're in this latter scenario, you're not the only one. A significant portion of homeowners from The Millennial and Gen Z generations are sticking it out with their starter homes due to their inability to finance a move to a larger home.
In these circumstances, it could be advisable to refinance from an adjustable-rate mortgage to a loan with a set interest rate. The procedure for this is quite similar to changing from one fixed-rate loan to another. You'll compare offers from different financial institutions, provide the necessary paperwork for the application, and settle your current debt entirely with the new financing.
Advantages and disadvantages of variable-rate home loans
Similar to other home loan options, adjustable-rate mortgages present both advantages and disadvantages. It's important to thoroughly assess these with a reliable lending professional to determine if this particular kind of financing suits your circumstances. To assist you, several crucial details are presented next.
Pros
- Potential for a lower introductory rate compared with fixed-rate loans.
- Chance for reduced monthly payments if the market improves and rates go down.
- Some borrowers might find qualifications less stringent on ARMs.
Cons
- Monthly payments can increase significantly after the fixed period ends.
- Comparing offers is likely to be more complicated than with fixed-rate loans.
- There’s less predictability and stability compared to fixed-rate mortgages.