ARMs Provide Buyers More Home Savings, Lower Monthly Payments
A recent study by Redfin found that homebuyers can save $150 per month by taking out an adjustable-rate mortgage (ARM) instead of a 30-year fixed-rate mortgage. The average ARM rate was 5.51% in March, compared to 6.19% for fixed-rate mortgages, resulting in lower monthly payments for ARM borrowers.
Homebuyers can save money by choosing an adjustable-rate mortgage (ARM) over a 30-year fixed-rate mortgage. The average ARM rate was 5.51% in March, while the average fixed-rate mortgage was 6.19%. This translates to a monthly payment of $2,578 for ARM borrowers, compared to $2,727 for fixed-rate borrowers. The savings are due to the largest discount ARM consumers have received since June 2022. ARMs typically make sense when rates are high, as they provide lower initial payments. However, there is some uncertainty associated with ARMs, as rates may increase after the original fixed-rate period.
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