5-Year ARM Rates Jump 1.33 Percentage Points in One Day

On May 26, 2025, the average rate for 5-year adjustable-rate mortgages (ARMs) surged to 7.93%, up from 6.60% the previous day. This sharp increase reflects broader fluctuations in the mortgage market, driven by economic indicators and market conditions. The significant jump in the 5-year ARM rate signals a shift in lending dynamics that could affect both new homebuyers and those considering refinancing.

The rise in ARM rates follows a period of relative stability in mortgage rates. On May 25, 2025, the national average interest rate for the benchmark 30-year fixed mortgage was 6.96%, while the average rate for 30-year FHA mortgages was 6.94%. These rates, along with the 5-year ARM rate, indicate tightening lending conditions that could influence the housing market. The average APR on a 30-year fixed-rate mortgage also saw a slight decrease to 7.081% on May 25, 2025, highlighting the complex interplay of factors affecting mortgage rates.

Recent trends in mortgage rates are part of a broader economic context where forecasts for 2025 suggest that mortgage rates may come down slightly, and price growth will moderate. However, this projection does not account for the current upward trend in ARM rates, which could complicate the outlook for homebuyers and lenders. The 5-year ARM rate, in particular, has risen to 7.93%, significantly higher than the 6.60% rate observed on May 25, 2025. This increase underscores the volatility in the mortgage market and the need for borrowers to stay informed about rate changes.

The impact of these rate changes on the housing market remains uncertain, but current trends suggest that borrowers may face higher costs for adjustable-rate mortgages. The substantial increase in the 5-year ARM rate could deter some borrowers from opting for adjustable-rate mortgages in favor of fixed-rate options. The recent data also emphasizes the importance of closely monitoring mortgage rates, as even small changes can have significant implications for borrowers and the broader economy.