Interest rates on ARMs tend to be lower than those on fixed-rate mortgages. Each ARM has not only a cap, but also an index, which is the benchmark interest rate upon which adjustments are based. There’s also the margin—the percentage interest rate, commonly 2%, added to or subtracted from the index when the loan adjusts. In April, 91.5% of all mortgage applications were for fixed-rate mortgages, according to the Mortgage Bankers Association. “Right now you can still get a jumbo fixed-rate loan for under 4%.

Source: Wall Street Journal July 05, 2017 14:48 UTC