US mortgage rates ease to 7.32%. What an ARM almost a point cheaper is worth, and when it stops being cheaper
US 30-year rates eased to 7.32% and 5/1 ARMs sit almost a point lower. See what the gap is worth on a USD 400,000 loan and what the reset rate changes.
The average 30-year fixed mortgage rate in the US eased to 7.32% in the week to 22 October 2026, down from 7.40% a week earlier, according to Freddie Mac's Primary Mortgage Market Survey.
The first fall in more than two months
The 15-year average slipped to 6.68% from 6.71%. A year ago they were 6.19% and 5.44% (Freddie Mac, 22 October 2026).
The Mortgage Bankers Association's weekly survey (21 October) showed the same turn. Its average 30-year conforming contract rate dropped to 7.41% from 7.50% in the week to 16 October, the first decrease in more than two months. The 5/1 adjustable-rate mortgage (ARM) averaged 6.46%.
Borrowers didn't come back. Purchase applications fell 7% on the week and were 18% below a year earlier, refinance applications 59% lower. ARMs held at 10.5% of applications.
"ARM rates remained almost a full percentage point lower than the 30-year fixed rate, giving qualified borrowers a lower rate option to purchase a home," said Joel Kan, MBA's deputy chief economist (MBA, 21 October 2026).
The Federal Reserve's next rate decision comes at the end of its 27 to 28 October meeting.
What a 0.95 point gap is worth for five years
The ARM vs Fixed Rate calculator puts the two loans side by side. You enter the loan amount and term, the fixed rate, the ARM type (3/1, 5/1, 7/1 or 10/1), its initial rate and the rate you assume after the fixed period. It shows both monthly payments, the ARM payment after the adjustment and projected total interest on each. It also gives the year from which one loan becomes cheaper overall, counting payments plus the balance still owed.
Take an illustrative USD 400,000 loan over 30 years at MBA's average rates: 7.41% fixed against a 5/1 ARM at 6.46%. The calculator gives USD 2,772.25 a month fixed and USD 2,517.76 on the ARM, so the ARM could be USD 254.49 a month cheaper for its first five years.
That is about USD 15,270 less paid by the reset. The lower rate also clears the loan faster: after five years the ARM balance is about USD 374,271 against USD 378,130. On the calculator's measure of payments plus balance owed, the ARM is about USD 19,128 ahead.
MBA's averages carry different points (1.11 on the ARM, 0.75 on the fixed loan). The calculator compares rates, so points aren't in these figures.
What the reset rate does to the answer
After year five, everything rests on the rate you assume after the first adjustment, which the calculator holds for the remaining 25 years.
If the ARM resets to 7.41%, today's fixed average, the payment rises to USD 2,743.96, still below the fixed payment because the balance is smaller. The calculator says the ARM stays cheaper over the whole term, with total interest of USD 574,253 against USD 598,009.
At 8.46%, a point above today's fixed average, the payment becomes USD 3,003.65 and the verdict flips: from year 11 the fixed rate is cheaper overall. Total interest on the ARM rises to USD 652,161.
At 9.46% the payment reaches USD 3,259.59 and the fixed rate is cheaper from year 8.
For the range an ARM's loan documents actually allow, the ARM Stress Test works from the index, margin and rate caps and shows the highest payment the caps permit.
Run your own numbers in Stresst
Every figure in these examples came out of the Stresst app. Put in your own quotes and in a couple of minutes you'll see the payment gap, the reset payment and the year the cheaper loan changes.
ARM vs Fixed Rate and the ARM Stress Test are part of Stresst Premium, which also adds PDF export on every calculator. You can try Premium free for 7 days. The Mortgage Payment calculator, the Refinance Calculator and Total Purchase Costs are free.
The Fed decides on 28 October and Freddie Mac's next weekly survey follows on 29 October, so download it now and have your numbers ready. On iPhone, Stresst is available as a beta through Apple's TestFlight app.
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Sources
- Freddie Mac, "Primary Mortgage Market Survey", rates as of 22 October 2026. https://www.freddiemac.com/pmms
- Mortgage Bankers Association, "Mortgage Applications Decrease in Latest MBA Weekly Survey", 21 October 2026. https://newslink.mba.org/mba-newslinks/2026/october/mortgage-applications-decrease-in-latest-mba-weekly-survey/
- Federal Reserve, "Meeting calendars and information", accessed 23 October 2026. https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
This article is general information only and is not financial, tax or legal advice.