Adjustable-Rate Mortgage (ARM) Rates
How adjustable-rate mortgages work, what the 5/6 and 7/6 labels mean, how the SOFR index and caps control future payments, and when an ARM can make sense.
Conventional benchmark: Freddie Mac weekly survey
Week of August 20, 2026Source: Freddie Mac Primary Mortgage Market Survey via FRED, updated August 20, 2026. National average survey rates, not an offer. Your rate will depend on credit score, loan-to-value, loan type, property and occupancy. Rates could change or not be available at commitment or closing. This product uses the FRED® API but is not endorsed or certified by the Federal Reserve Bank of St. Louis.
How Adjustable-Rate Mortgage (ARM) pricing relates to this benchmark. The Freddie Mac figures above are fixed-rate benchmarks. An ARM's introductory rate is usually set below the 30-year fixed benchmark in exchange for the rate adjusting later; the size of that gap changes with the shape of the yield curve and can shrink to almost nothing. The "7/6 SOFR ARM" row in the daily index below is the closest published national figure.
Daily rate-lock index (OBMMI)
Updated daily by providerIndex data © Optimal Blue, LLC. Optimal Blue Mortgage Market Indices.
Source: Optimal Blue Mortgage Market Indices (OBMMI), updated August 26, 2026. National average survey rates, not an offer. Your rate will depend on credit score, loan-to-value, loan type, property and occupancy. Rates could change or not be available at commitment or closing.
Daily index — see the "7/6 SOFR ARM" row
Updated daily by providerSource: Mortgage News Daily rate index, updated August 26, 2026. National average survey rates, not an offer. Your rate will depend on credit score, loan-to-value, loan type, property and occupancy. Rates could change or not be available at commitment or closing.
How Adjustable-Rate Mortgage (ARM) rates are set
An adjustable-rate mortgage starts with a fixed rate for an introductory period and then adjusts at set intervals for the rest of the term. The most common products today are labeled 5/6, 7/6 and 10/6: the first number is the years the rate is fixed and the second is how often it adjusts afterward (every six months). Older ARMs adjusted annually and were labeled 5/1 or 7/1.
After the fixed period, the new rate equals a published index plus a margin set in your note. Nearly all new ARMs use the 30-day average SOFR (Secured Overnight Financing Rate) as the index. The margin, often around 2.75 to 3 percentage points, does not change. Caps limit how far the rate can move: a typical structure is 2/1/5, meaning up to 2 points at the first adjustment, 1 point at each later adjustment and 5 points above the start rate over the life of the loan.
The initial ARM rate is usually lower than the 30-year fixed rate because the lender is protected from rate increases after the fixed period ends. How much lower depends on the shape of the yield curve. When short- and long-term yields are close together, the ARM discount shrinks and can occasionally disappear; when long-term yields are well above short-term yields, ARMs look far more attractive.
Conforming ARMs are underwritten on a qualifying rate that accounts for possible adjustments, so the initial payment savings do not always translate into a larger loan approval. Jumbo ARMs are especially common because portfolio lenders like the shorter effective duration.
An ARM fits best when you have a realistic plan to sell or refinance before the fixed period ends, or when you can absorb the maximum payment under the caps if that plan changes. Ask for the worst-case payment schedule alongside the initial payment before deciding.
Rates shown could change or may not be available at commitment or closing.
Adjustable-Rate Mortgage (ARM) Rates: common questions
What does 7/6 ARM mean?
The rate is fixed for the first seven years, then adjusts every six months based on the SOFR index plus the margin in your note, subject to the caps.
How high can an ARM rate go?
The lifetime cap in your note sets the maximum, commonly 5 percentage points above the initial rate. Your Loan Estimate shows the maximum possible payment.
Is an ARM cheaper than a 30-year fixed?
The initial rate is usually lower, but not always. When the yield curve is flat or inverted, the discount can be small. Compare current quotes for both.
Can I refinance an ARM before it adjusts?
Yes, subject to credit approval at that time. Most ARMs have no prepayment penalty, but confirm on your loan documents and keep in mind that future rates and your future qualification are not certain.