Chart of the Week: ARM Share of Home Purchase Applications

Source: MBA Builder Applications Survey, Weekly Applications Survey

According to data from MBA’s Builder Applications Survey (BAS), 24.6% of applications to purchase a newly built home were adjustable rate mortgage (ARM) loan applications in October. Rates for ARM loans have been around 80 basis points lower than the 30-year fixed rate, resulting in significantly lower interest payments for the borrower, which have made ARM loans appealing to buyers looking to lower their monthly payments in an environment where affordability challenges persist. In October, the average rate on a 5-year ARM loan was 5.58%, compared to 6.37% on a 30-year fixed rate loan, based on the Weekly Applications Survey (WAS).

Home builders have been frequently offering rate buydowns on fixed-rate loans and also have been able to offer lower than market rates on ARM loans through permanent rate buydowns. The lower rates from buydowns contributed to a higher ARM share for new home purchases than the ARM share on purchase applications in the WAS, which tends to capture mostly purchase applications on existing homes. The ARM share from the WAS stood at 9.1% in October 2025, as shown in the chart.

As we highlighted in the BAS press release earlier this month, new homes sales for October were estimated to have increased 13% in October to 771,000 units. This annualized sales pace was the strongest since August 2024. Most of the strength in sales can be attributed to lower mortgage rates than a year ago, the ongoing use of builder concessions and rate buydowns, and growing levels of for-sale inventory for newly built homes. The Census Bureau’s reports on new home sales in September and October were not released because of the government shutdown. In the meantime, MBA’s BAS new home sales data continues to fill the gap.

– Anh Doan (adoan@mba.org), Joel Kan (jkan@mba.org)