ARM Share of Mortgage Locks Hits Record 17%

When the fixed-rate menu looks pricey, buyers order off the adjustable one. ARMs made up 17% of October rate locks, the highest share in Optimal Blue's monthly report since 2019, HousingWire reported ^[1].

The 30-year fixed averaged 7.35% at HousingWire's Mortgage Rates Center on Tuesday, a hair below 7.38% a week earlier ^[1].

How we got here

• Optimal Blue counted 19% fewer locks than in September and 38% fewer than a year ago ^[1].
• Thirty-year jumbo loans averaged 7.56%, while 30-year FHA loans rose 6 basis points to 7.22% ^[1].
• Core CPI rose 0.296% in October, above the 0.22% forecast, Redfin noted ^[2].
• Mortgage broker Gay Veale told HousingWire about 75% of her clients get seller concessions, averaging at least $10,000 ^[1].

But relief may be slow. Redfin head of economics Chen Zhao wrote that the inflation report all but guarantees a December 9 hike and raises the odds of a 50 basis point move or an added hike in January ^[2]. First American's Sam Williamson said hotter inflation likely stretches out the wait for lower mortgage rates ^[1].

What it means for you

Seller money is the buyer's best tool right now. By our math, a $400,000 loan at 7.35% costs about $2,756 a month, while a 3-2-1 temporary buydown that starts three points lower cuts the first-year payment to about $1,991. That relief fades over three years, so qualify on the full rate. An ARM with about five years of lower rates, the term Veale says most clients pick, makes sense mainly if you expect to sell or refinance before it resets ^[1].

Zoom out

Freddie Mac's weekly 30-year average sits at 7.18% ^[3]. Inventory is building in many markets, and loan officers told HousingWire that leverage is shifting toward buyers as a result ^[1].