Home mortgages with fixed rates can be attractive during periods of economic uncertainty and fluctuating market conditions, such as we are experiencing in 2025. However, adjustable-rate mortgages (ARMs) are experiencing a resurgence. Earlier this month, the percentage of borrowers applying for ARMs reached 9.6%, its highest level since November 2023.¹

The appeal of ARMs during times of economic uncertainty.

ARMs are attractive during uncertain economic periods due to their initial affordability and flexibility. Short-term homebuyers and real estate investors can secure a lower introductory interest rate for a specific time frame (e.g., 5 or 7 years), resulting in reduced monthly mortgage payments compared to fixed-rate mortgages. This makes buying a home more accessible and helps buyers manage monthly expenses better.

Is now a good time to get an ARM?

Every short-term homebuyer and real estate investor has a unique financial situation, borrowing capacity, and budget considerations. With that in mind, an ARM may be a good option for potential buyers and investors who do not intend to stay in the home for an extended period or anticipate a drop in interest rates and plan to refinance. Additionally, an ARM can be advantageous to buyers when home prices are high. In March 2025, the average sales price of new houses was $497,700, up from $492,700 in February 2025.²

Keep an eye on May 6-7.

While the Federal Reserve doesn't directly set mortgage interest rates, its decisions regarding the federal funds rate can influence mortgage rates. The Federal Reserve is scheduled to meet on May 6-7, 2025, to assess current economic conditions and determine if any adjustments to the federal funds rate are necessary. Any changes to the Federal Reserve's monetary policy, including federal rate adjustments, can impact mortgage interest rates, along with macroeconomic conditions like inflation and the bond market. At the Federal Reserve's last meeting in March 2025, a pause on changing federal rates was enacted, keeping them between 4.25% and 4.50%,³ but there is always the possibility that rates will change.

Have questions about the current mortgage market? Our mortgage team is here to answer questions you have about the mortgage market. Whether you're considering a purchase or looking to refinance, contact us today to explore your options.


Sources:
¹ https://www.businessinsider.com/homebuyers-opting-for-adjustable-rate-mortgages-good-idea-arm-rates-2025-4
² https://www.census.gov/construction/nrs/current/index.html
³ https://www.nerdwallet.com/article/banking/what-is-the-fed-rate

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank is not affiliated with nor endorses Business Insider, the U.S. Census Bureau, NerdWallet, or the U.S. Federal Reserve.