As Long-Term Rates Hit a Seven-Week High, Borrowers Are Flocking to Adjustable-Rate Mortgages

• May 20th

by UrbanTurf Staff

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Mortgage applications fell to their lowest level in five weeks as long-term borrowing costs climbed again, according to the latest weekly survey from the Mortgage Bankers Association. The 30-year fixed rate on conforming loans jumped to 6.56% — its highest mark in seven weeks — pushing overall application volume down 2.3%. 

MBA Vice President and Deputy Chief Economist Joel Kan attributed the move to "ongoing concerns around inflation from higher fuel costs, combined with rising concerns over global public debt," which drove Treasury yields higher both in the U.S. and abroad. Purchase applications bore the brunt of the pullback, falling 4% across conventional and government loan types, even as purchase volume remained 8% ahead of the same week last year.

With fixed rates climbing, borrowers are increasingly gravitating toward adjustable-rate mortgages to find breathing room. The ARM share of total applications jumped to 9.6%— the highest level since October 2025 — as the 5/1 ARM rate of 5.76% offered an 80-basis-point discount relative to the 30-year fixed. For a DC-area buyer taking out a $700,000 loan, that spread translates to roughly $375 less per month during the ARM's initial fixed period. 

The trade-off, of course, is risk. An ARM's initial rate is only guaranteed for a set period — typically five or seven years — after which the rate resets with market conditions. If yields stay elevated or move higher, borrowers who locked in today's ARM rate could find themselves facing meaningfully larger payments down the road. 

This article originally published at https://dc.urbanturf.com/articles/blog/as_long-term_rates_hit_a_seven-week_high_borrowers_are_flocking_to_adjustab/24649.