US homeowners face significant adjustable-rate mortgage resets

Approximately 150,000 borrowers in the United States are scheduled to experience their first adjustable-rate mortgage (ARM) interest rate adjustment this year. An additional 186,000 borrowers will face initial adjustments in 2027, followed by 155,000 in 2028.

Because interest rates have risen since many of these loans were originated, monthly payments could increase substantially. For example, borrowers with seven-year ARMs originated in 2019 may see a median payment increase of approximately $1,080, as median rates could jump from 3% to roughly 6.06%.

An ARM typically features a fixed-rate period followed by an adjustable-rate period where the interest rate is determined by a market index plus a set margin. While ARMs can offer lower initial rates, they carry the risk of much higher payments once the fixed period ends. Borrowers facing resets may consider refinancing into fixed-rate mortgages or maintaining their current loans if they can absorb the increased costs.