Franklin, Tenn. — October 7, 2026

Adjustable-rate mortgages are drawing their strongest borrower interest in nearly four years, according to the October Mortgage Monitor report released Oct. 5 by Intercontinental Exchange, the mortgage data and technology company known as ICE. ARMs accounted for more than 11% of rate locks, ICE said, as its conforming 30-year fixed rate index reached 7.2% on Sept. 24.

There are now 3.1 million active first-lien ARMs, the most in five and a half years, though they make up just 5.6% of active mortgages, said Andy Walden, ICE's head of mortgage and housing market research. Only about a third of active ARMs have begun adjusting, because most newer loans remain in their introductory periods.

An ARM typically carries a fixed introductory rate for a set number of years, often five, seven or 10, before it begins adjusting at regular intervals. When the introductory rate expires, the new rate is calculated by adding two numbers, according to the Consumer Financial Protection Bureau. The first is the index, a market interest rate that moves with general conditions. The second is the margin, a fixed number of percentage points set by the lender in the loan agreement that does not change after closing.

The sum of the index and margin, known as the fully indexed rate, is then limited by caps. The CFPB describes three kinds. An initial adjustment cap limits how far the rate can move at the first reset and is commonly two or five percentage points. A subsequent adjustment cap limits each later change and is most often one or two points. A lifetime cap limits the total change over the life of the loan and is most commonly five points above or below the initial rate, though some loans carry higher caps.

Those terms explain why reset outcomes vary so widely. ICE estimated that if the Federal Reserve's quarter-point increase in September passes fully through to ARM indexes, the median affected borrower already in the adjustable phase would see a monthly payment increase of about $14, while more recently originated loans with larger balances could see a median increase of roughly $53.

The larger changes are concentrated among borrowers facing their first reset. About 180,000 ARMs are scheduled for their first adjustment in 2027, up from roughly 150,000 in 2026, with another 155,000 scheduled for 2028. Among next year's group, roughly 74,000 seven-year ARMs originated in 2020 are expected to see the largest median payment increase, about $1,066 a month, or 36%, ICE said. The company attributed that to their low starting rates, higher balances and higher periodic rate caps.

The CFPB recommends comparing caps, not just starting rates, when shopping ARMs, and asking the lender to calculate the highest payment the loan could ever require. That figure appears on the Loan Estimate, which lenders must provide within three business days of an application. The agency also notes that margins can vary considerably between lenders and can be negotiated.

For existing ARM borrowers, the loan's note and recent statements show the index, margin, caps and the date of the first adjustment. Borrowers approaching a first reset can use those terms to estimate a new payment well before it arrives, which leaves time to compare the adjusted loan against alternatives such as a refinance.

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