Intercontinental Exchange, Inc. (ICE), one of the world's leading providers of financial market technology and data powering global capital markets, has released its October 2026 ICE Mortgage Monitor Report. The analysis finds that adjustable-rate mortgages (ARMs) are drawing renewed interest from borrowers as mortgage rates climb, with ARMs accounting for more than 11% of rate locks — their largest share in nearly four years. The shift comes as ICE's Conforming 30-year Fixed Rate Index reached 7.2% on Sept. 24. Unlike fixed-rate loans, ARMs hold an initial rate steady through a set introductory period — commonly five, seven, or 10 years — before adjusting periodically against an underlying index, a structure that comes back into focus for borrowers when fixed-rate pricing climbs.

“ARMs are becoming more attractive to borrowers looking for relief from today's higher fixed rates, but the overall market exposure to adjustable payments remains relatively limited,” said Andy Walden, head of Mortgage and Housing Market Research at ICE. “There are now 3.1 million active first-lien ARMs, the most in 5.5 years, but they represent just 5.6% of active mortgages. And because most newer ARMs are still in their introductory periods, only about a third of active ARMs have begun adjusting.”

Adjusting ARMs at Lowest Level in More Than 25 Years

Just 1.05 million active ARM loans have reached their first reset and are currently operating as adjustable-rate loans — the lowest number in more than 25 years. More than 90% of ARMs originated since 2022 remain in their introductory fixed-rate periods, while most post-reset ARMs were originated more than a decade ago and have already experienced rate adjustments during the 2022-2023 Fed tightening cycle. Because this adjusting cohort is the portion of the ARM book whose payments currently move with rate conditions, its small size underpins the report's point that overall market exposure to adjustable payments remains limited.

Fed Rate Increase Seen Having Modest, Gradual Impact on Existing Borrowers

The recent Fed rate increase is expected to have a modest and gradual impact on most existing ARM borrowers. Assuming a full 25-basis-point pass-through to underlying ARM indexes, the median affected borrower would see their monthly payment increase by about $14. More recently originated loans, which tend to carry higher balances, could see a more notable median increase of roughly $53 per month. How quickly those changes arrive depends on each loan's underlying index and adjustment terms, which is why the effects phase in across the adjusting population rather than hitting all borrowers at once.

Initial ARM Resets Expected to Remain Limited in 2027

Initial ARM resets are expected to remain relatively limited in 2027, though certain borrowers could see larger payment changes. Approximately 180,000 ARMs are scheduled for their first reset next year, up modestly from roughly 150,000 in 2026, with another 155,000 currently scheduled for 2028. Among next year's resets, roughly 74,000 7-year ARMs originated in 2020 are expected to see the largest median payment increase, at approximately $1,066 per month, or 36% — reflecting their lower initial rates, higher balances and higher periodic rate caps. Reset timing follows directly from origination dates, so this forward calendar reflects earlier lending vintages rather than current lock activity.

Home Equity Borrowers to Feel Short-Term Rate Changes More Quickly

Changes in short-term rates are expected to reach home equity borrowers more quickly. HELOCs are typically tied directly to the prime rate and reset monthly. ICE's McDash Home Equity data shows a median outstanding balance of $44,000 among second-lien HELOCs, with a median rate of 7.4%. A 25-basis-point increase would translate to a roughly $9 increase in the median monthly payment. That monthly reset mechanic means home equity borrowers see short-term rate changes show up in their payments far sooner than most first-lien ARM borrowers, who are still inside multi-year introductory periods.

Borrowers Increasingly Paying Upfront to Lower Their Rates

Borrowers are also increasingly paying upfront to reduce their mortgage rates. Points are prepaid interest paid at closing in exchange for a lower rate, effectively trading upfront cost for a smaller monthly payment. The share of borrowers paying points, largely to buy down their interest rate, reached 50% in August — the highest level since early 2025. Meanwhile, the share receiving temporary rate buydowns remains near recent-year lows.

“Changes in the rate environment affect borrowers differently depending on when their loan was originated and how it's structured,” said Bob Hart, president of ICE Mortgage Technology. “That makes timely data and connected technology especially important. ICE gives lenders and servicers the information and tools they need to understand what's happening across their portfolios and support borrowers as their needs change.”

Source: GlobalFinTechSeries