ARM reset wave set to crest in 2027, hit pockets of borrowers

A new wave of adjustable-rate mortgage (ARM) resets will arrive in 2027, lifting payments for select borrowers but not creating a systemic threat to the mortgage market or the broader U.S. economy, according to newly released data from Intercontinental Exchange (ICE) and Optimal Blue. There are now 3.1 million active first-lien ARMs, the highest level in 5 1/2 years, but they account for only 5.6% of all active mortgages, according to Andy Walden, head of mortgage and housing market research at ICE. “Because most newer ARMs are still in their introductory periods, only about a third of active ARMs have begun adjusting,” Walden said in a statement. ICE data shows that 84,000 ARMs had reset through July 2026, with another 64,000 scheduled to reset by the end of the year, bringing the 2026 total to 148,000. Resets are projected to rise to 186,020 in 2027 before easing to 154,710 in 2028. These counts will shift as new ARMs are originated and as borrowers refinance, sell or otherwise exit before their first reset. Why 2027 is a focal year ARM usage plunged to about 1% of rate lock volume in December 2020, when fixed mortgage rates hovered near historic lows, according to Optimal Blue l...