While ARMs can offer lower rates during their introductory period, those rates eventually adjust based on market conditions.
With mortgage rates stabilizing and forecasts suggesting potential declines in the coming year, some homeowners are beginning to consider whether converting to a fixed-rate mortgage could provide greater long-term stability.
Here are a few things to consider as you evaluate your next steps.
Where Mortgage Rates Stand Today
Mortgage rates have experienced several shifts in recent years.
Rates reached a peak of about 7.79% in October 2023, but began trending downward through 2024 and into 2025. By late 2024, average 30-year fixed mortgage rates had eased to around 6.375%.
While rates fluctuated throughout 2025, they generally remained within the upper 6% to low 7% range, before stabilizing closer to the low 6% range toward the end of the year.
Many economists expect gradual rate declines in 2026, although most forecasts do not expect a return to the extremely low pandemic-era rates.
When Converting to a Fixed Rate May Make Sense
For many homeowners, refinancing from an ARM to a fixed-rate mortgage can provide predictability and peace of mind.
You may want to consider converting if:
- Your introductory rate period is ending soon. Once the fixed period ends, your rate can adjust periodically and may increase depending on market conditions.
- You plan to stay in your home long-term. A fixed-rate mortgage provides stable monthly payments for the life of the loan, which can make long-term budgeting easier.
- Fixed rates are competitive. If the difference between your adjustable rate and a fixed rate is relatively small, locking in a fixed payment may be worth the added stability.
For homeowners who prefer consistency in their monthly payments, converting to a fixed rate can help remove uncertainty from future budgeting.
Situations Where Waiting Might Be the Right Choice
Refinancing isn’t always the right move for everyone.
You may choose to keep your current ARM if:
- You expect to move in the next few years. If you plan to sell before your adjustable period begins or before rates increase significantly, you may benefit from keeping the lower introductory rate.
- You’re comfortable with rate fluctuations. Some homeowners are comfortable managing potential payment changes if they believe rates may remain stable or decline.
The right decision ultimately depends on your personal plans, financial goals, and comfort level with changing rates.
What Factors Influence Mortgage Rates?
Several economic factors affect mortgage rates, including:
Federal Reserve Policy: While mortgage rates are not directly tied to the federal funds rate, changes in policy often influence broader borrowing costs.
10-Year Treasury Yield: Mortgage rates tend to closely follow movements in the 10-year Treasury Yield, which reflects investor expectations for economic growth and inflation.
Inflation Trends: Persistently high inflation typically keeps borrowing costs elevated. A sustained drop in inflation is often necessary for mortgage rates to fall further.
Housing Supply and Demand: Limited housing inventory combined with strong demand can keep home prices high even as interest rates shift.
Every homeowner’s situation is different.
If you currently have an adjustable-rate mortgage and would like help evaluating whether converting to a fixed-rate loan makes sense, our mortgage team is here to help. A quick review of your loan and financial goals can help determine whether refinancing now, or waiting, may be the best strategy for you.
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