Why Buyers Are Leaning Into Adjustable-Rate Mortgages in 2025

by Maiyah Jimenez

If you’ve been following the market, you know mortgage rates have been one of the biggest stories this year. As a broker with 11 years of experience navigating all kinds of market cycles, I’ve noticed a clear trend emerging in 2025: buyers are turning back to adjustable-rate mortgages (ARMs).

For years, ARMs had a bit of a stigma, but with 30-year fixed rates holding steady in the mid-6% to 7% range, buyers are looking for flexibility and affordability. Many lenders are now offering ARMs starting in the low 5% range, giving buyers immediate monthly payment relief and the ability to qualify for homes that would otherwise stretch their budgets.

Why It’s Trending Now

Affordability Pressures: Home prices in markets like Long Beach and across Southern California aren’t showing major signs of dropping. ARMs can help keep monthly payments more manageable.
Short-Term Plans: Many buyers aren’t planning to stay in their first home for 30 years. If you know you’ll move or refinance in 5–7 years, an ARM could be a strategic move.
Refinancing Optimism: Buyers are betting that rates will come down in the next few years, which could make refinancing into a fixed loan more attractive later.

My Take

I always tell clients that real estate is personal—what works for one buyer might not be the best choice for another. An ARM can be a powerful tool when used strategically, especially for first-time buyers or investors looking to maximize cash flow. But it’s also important to look closely at the terms, the adjustment caps, and your long-term plans.

This trend is really about buyers taking control in a higher-rate environment and finding creative ways to make homeownership possible.

If you’re curious about whether an ARM makes sense for your situation—or want to compare different financing options—I’d be happy to walk you through the numbers.