ARM Demand Climbs as High Rates Push Borrowers Toward Lower Initial Payments
ICE's October Mortgage Monitor, released Oct. 5, found ARMs topped 11% of rate locks, their largest share in nearly four years. About 180,000 ARMs face first resets in 2027.
By Gino Yatouma · 3 min read
Adjustable-rate mortgages accounted for more than 11% of rate locks, their largest share in nearly four years, according to ICE's October 2026 Mortgage Monitor, released Oct. 5. ICE's conforming 30-year fixed rate index reached 7.2% on Sept. 24.
Why this matters: As fixed rates climb, more borrowers are choosing ARMs for a lower starting payment. That trade carries reset risk later, and ICE's data shows which loans face it soonest.
Cover: a calendar beside a payment line that steps up. Illustration created for mortgage.news; it does not depict a real person, property or document.
How big the ARM market is
There are 3.1 million active first-lien ARMs, the most in 5.5 years, but they are just 5.6% of active mortgages, ICE said. Only 1.05 million have reached their first reset. More than 90% of ARMs originated since 2022 are still in their introductory fixed-rate periods.
Andy Walden, ICE's head of mortgage and housing market research, said in the release that ARMs "are becoming more attractive" but "overall market exposure to adjustable payments remains relatively limited."
Upcoming resets
| First reset year | ARMs scheduled (approx.) |
|---|---|
| 2026 | 150,000 |
| 2027 | 180,000 |
| 2028 | 155,000 |
Among next year's resets, about 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. Those loans had low starting rates and higher balances. ICE's estimates depend on rate assumptions, and actual changes will follow each loan's index, margin and caps.
HELOCs move faster
HELOCs usually track the prime rate and adjust monthly. ICE's data shows a median HELOC balance of $44,000 at a median rate of 7.4%. A 25-basis-point increase would add about $9 to the median monthly payment.
Practical takeaway
For borrowers weighing an ARM: ask for the index, margin, caps and the payment at the first possible adjustment, in writing. For loan officers: contact 2020 seven-year ARM borrowers well before 2027 resets to review refinance or budget options. No product suits every borrower.