150,000 homeowners face first adjustable-rate mortgage reset this year, some payments jumping over $1,000

About 150,000 homeowners with adjustable-rate mortgages are scheduled to see their rate adjust for the first time this year, with 64,000 of those resets falling between August and December, according to data from ICE Mortgage Technology cited by CNBC. Another 186,000 borrowers face their first adjustment in 2027, and 155,000 in 2028.

Because rates have risen since many of these loans were issued, some borrowers' monthly payments could jump by hundreds of dollars, and in some cases more than $1,000; a smaller share will see payments fall. Seven-year ARMs originated in 2019 carry a median initial rate of 3% and a median unpaid balance of $548,000; those borrowers face a median adjusted rate of 6.06%, pushing their payment up by a median $1,080. By contrast, three-year ARMs from 2023 had a median initial rate of 8.38% and are adjusting down to roughly 7.71%, cutting payments by a median $124.

ARMs make up just 5.6% of the roughly 55.4 million active U.S. mortgages, with 3.1 million outstanding, the largest volume in 5.5 years. Lenders must notify borrowers seven to eight months before their first adjusted payment is due, followed by a second notice 60 to 120 days out with the exact new rate. Housing Finance Policy Center fellow Laurie Goodman said borrowers who took ARMs got a lower initial rate "in exchange for the possibility that rates could rise," and some are now facing that outcome; experts note options include keeping the loan or refinancing, which typically costs 2% to 5% of the loan amount in closing costs.