What happens when your mortgage adjusts to reality? Many homeowners are about to find out as their adjustable-rate mortgages (ARMs) approach the end of their initial low-rate periods, potentially facing higher interest rates once these rates expire. Given that mortgage rates are still quite high, these homeowners could see substantial increases in their monthly mortgage payments.

• 1.7M homeowners have chosen ARMs since 2019 to find temporary relief amid America’s housing unaffordability crisis.
• 328K homeowners have already experienced ARM rate resets, with another 102K ARM loans expected to reset in the next 12 months.

Housing blues: On the other hand, 30-year fixed-rate mortgage rates recently dropped to their lowest level since early April but are still high compared to pre-2022 levels. For the first time since the pandemic began, the typical US home sold for 0.3% less than its list price in the four weeks leading up to June 23. High mortgage rates and home prices are deterring buyers, but relief could be on the horizon. As more homes sell below their asking prices and sellers cut prices, buyers might soon find more affordable options or throw in the towel and rent instead.