Adjustable-rate mortgage share tops 11% of rate locks, even as loans currently adjusting sit at a 25-year low
Adjustable-rate mortgages (ARMs) — home loans that carry a fixed introductory rate before adjusting to prevailing market levels — claimed more than 11% of rate locks in September, their largest share in nearly four years.
The surge came as 30-year fixed rates climbed to 7.2%, according to the October 2026 Mortgage Monitor Report from Intercontinental Exchange, Inc.
ARM applications accounted for 10.3% of total mortgage applications in the week ended Oct. 2, up from 5.9% in the same week a year earlier, according to the Mortgage Bankers Association (MBA).
As fixed rates near their highest level of 2026, brokers are fielding more inquiries from borrowers seeking a lower entry-point rate without leaving the market altogether.
Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, says higher rates are dampening both refinance and purchase activity, with first-time and FHA borrowers feeling the pressure most. https://t.co/J6NsbEmSbF
— Mortgage Professional America Magazine (@MPAMagazineUS) October 7, 2026
System exposure remains contained
Despite the demand shift, systemic risk looks limited. ICE’s data show 3.1 million active ARMs outstanding, the most in 5.5 years, but they represent just 5.6% of the roughly 55.4 million active mortgages in the US.
More than 90% of ARMs originated since 2022 remain in their introductory fixed-rate periods, and the number currently operating as adjustable is at its lowest level in more than 25 years.
“ARMs are becoming more attractive to borrowers looking for relief from today’s higher fixed rates, but the overall market exposure to adjustable payments remains relatively limited,” said Andy Walden, head of Mortgage and Housing Market Research at ICE.
“And because most newer ARMs are still in their introductory periods, only about a third of active ARMs have begun adjusting.”
Of the 3.1 million active ARMs, just 1.05 million have reached their first reset.
For brokers assessing the right loan product for affordability-stretched clients, ARM exposure remains more prospective than immediate. but the reset calendar ahead warrants attention.
The reset calendar ahead
Around 150,000 ARM loans are scheduled for their first adjustment in 2026, rising to approximately 180,000 in 2027.
Among next year’s cohort, roughly 74,000 seven-year ARMs originated in 2020 face a median payment increase of approximately $1,066 per month, a 36% jump, as pandemic-era introductory rates meet today’s market conditions.
Not all borrowers face a payment increase. Three-year ARMs originated in 2023 at a median initial rate of 8.38% are expected to see their rate fall to around 7.71%, trimming monthly payments by roughly $124.
Brokers advising clients on buydown strategies in a rising-rate market should also note that the share of borrowers paying upfront points reached 50% in August, the highest level since early 2025, reflecting the premium buyers now place on locking in a lower rate at closing.
“Changes in the rate environment affect borrowers differently depending on when their loan was originated and how it’s structured,” said Bob Hart, president of ICE Mortgage Technology.
“ICE gives lenders and servicers the information and tools they need to understand what’s happening across their portfolios and support borrowers as their needs change.”
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