Fortune’s July 8-9 mortgage roundup paired sample 7/6 ARM offers from major lenders with broader refinance-rate data and guidance on when adjustable loans or refinancing may suit borrowers.
Sample 7/6 adjustable-rate mortgage rates at major lenders ranged from 5.875% to 6.750% as of July 8, with annual percentage rates from 6.351% to 6.763% in Fortune’s market roundup. The figures covered Bank of America, U.S. Bank, Zillow Home Loans and Wells Fargo, based on a hypothetical borrower profile, location assumptions and, in some cases, mortgage discount points. A 7/6 ARM keeps its initial fixed rate for seven years and then resets every six months. A related Fortune review of Mortgage Resource Center data showed the average U.S. 30-year fixed refinance rate at 6.666% as of July 9. Conventional refinance rates were 6.666% for 30 years, 6.519% for 20 years, 5.772% for 15 years and 5.655% for 10 years; jumbo refinance rates were 6.578% for 30 years and 6.101% for 15 years; FHA refinance rates were 5.944% for 30 years and 5.578% for 15 years; and VA refinance rates were 6.070% for 30 years and 5.679% for 15 years. Fortune said fixed-rate mortgages account for about 92% of U.S. home loans, while roughly 8% of borrowers choose ARMs. It said ARMs may suit homeowners who expect to move before the fixed period ends, real estate investors planning to rent out or flip a property, and buyers in high-rate markets seeking a lower introductory rate. The report added that refinancing can make sense if a borrower can secure a rate about 1 percentage point below their current loan, wants to tap home equity through a cash-out refinance, change a loan term, or switch loan types, including moving from an ARM to a fixed-rate mortgage.