For homeowners who took out adjustable-rate mortgages (ARMs) when interest rates were near historic lows, the bill is coming due. Thousands will soon lose the protection of their introductory fixed rates, and some could see their monthly mortgage payments jump by more than $1,000.
The question is not whether these resets will trigger a housing crisis. The numbers are too small to suggest that. The more immediate concern is how borrowers will manage higher payments.
How Many Mortgages Will Reset in 2027?
Intercontinental Exchange (ICE) estimates that 3.1 million first-lien ARMs are currently outstanding, accounting for 5.6% of active mortgages. Approximately 1.05 million have already entered their adjustable-rate periods.
The number of loans scheduled for their first reset will rise from 148,000 in 2026 to 186,020 in 2027, an increase of 26%, before declining to 154,710 in 2028. That number rises to 252,000 in 2029, 293,000 in 2030 and 281,000 in 2031, before jumping to 425,000 in 2032, reflecting the renewed popularity of adjustable-rate mortgages since 2022. Although the eventual payment changes will depend on future interest rates, the growing reset calendar shows how today’s affordability decisions can create interest-rate exposure years later.
These are scheduled resets, not guaranteed outcomes. Some borrowers will refinance, sell their homes, or pay off their mortgages before the adjustment date.
Who Faces the Largest Mortgage Payment Increases?
The steepest increases are expected among homeowners who borrowed in 2020, when mortgage rates were exceptionally low. Approximately 74,000 borrowers with seven-year ARMs originated that year are scheduled for their first reset in 2027. ICE projects their median mortgage rate will increase from 2.75% to 5.79%, raising the median monthly payment by $1,066, or 36%.
That is nearly $12,800 in additional mortgage payments annually. Another 65,000 borrowers who originated five-year ARMs in 2022 face a projected median monthly increase of $430, or 22%.
Across all mortgages scheduled for their first reset in 2027, ICE estimates a median payment increase of $645 per month, or 24%. Actual increases will depend on prevailing interest rates, outstanding balances, loan terms, and adjustment caps.
Why Can't Borrowers Simply Refinance?
Refinancing may offer little relief for homeowners who secured introductory rates below 3%. Replacing an ARM with a fixed-rate mortgage at today’s higher rates could leave borrowers with a similar or even larger payment. Refinancing also involves closing costs and requires borrowers to qualify under current lending standards.
Selling is another possibility, but it comes with transaction costs and the prospect of financing another home at prevailing rates. For many homeowners, remaining in place and absorbing the higher payment may be the least expensive option.
Whether they can afford to do so depends on income growth, savings, and other financial obligations. A household earning considerably more than it did in 2020 may manage the adjustment. A borrower whose income has remained flat while insurance, taxes, and living expenses have risen may have less flexibility.
Will Higher Payments Lead to More Mortgage Delinquencies?
A payment increase does not automatically translate into a missed mortgage payment. Today’s lending standards also differ from those preceding the 2008 housing crisis. Post-crisis underwriting generally requires lenders to assess borrowers’ ability to repay using more conservative payment assumptions.
But qualifying for a mortgage in 2020 does not guarantee the borrower has the same financial capacity seven years later. Employment changes, rising household expenses, and depleted savings can make higher payments difficult to absorb.
Home equity will influence the outcome. Borrowers with considerable equity may be able to sell if their mortgage becomes unaffordable. Those with limited equity, particularly in markets where prices have declined, could face greater difficulty. The borrowers worth watching are those experiencing a payment increase alongside weakening finances or declining property values.
Could ARM Resets Push Home Prices Lower?
The national impact is likely to be limited. The roughly 341,000 mortgages scheduled to reset in 2027 and 2028 represent less than 1% of outstanding first-lien mortgages. More importantly, a mortgage reset does not automatically create a home listing. Many borrowers will adjust household spending rather than sell.
The potential housing market impact depends on where these loans are concentrated. In markets already experiencing price declines, borrowers facing higher payments may have fewer refinancing options. If financial pressure forces more homeowners to sell, additional inventory could weigh on local prices. That relationship is not automatic. Higher mortgage payments must first lead to increased selling or mortgage distress before they can affect housing supply.
Why Are Adjustable-Rate Mortgages Making a Comeback?
Despite the approaching payment increases, borrowers are turning to ARMs again. ICE reports that ARMs accounted for more than 11% of mortgage rate locks in September 2026, their highest share in nearly four years.
The attraction is straightforward: lower introductory interest rates can reduce monthly payments when fixed-rate mortgages are expensive. But the savings come with a trade-off. More than 90% of ARMs originated since 2022 remain in their initial fixed-rate periods, meaning another group of borrowers will face adjustments later in the decade.
For buyers choosing ARMs today, the calculation depends on how long they expect to hold the mortgage, their ability to absorb higher payments, and where interest rates stand when the introductory period ends.
The Hidden Cost of ARM Resets May Be Lower Consumer Spending, Not Falling Home Prices.
The economic consequences of ARM resets may extend beyond housing. Applying ICE’s projected $1,066 monthly payment increase to the approximately 74,000 seven-year ARMs originated in 2020 produces an illustrative annual increase in mortgage payments of nearly $947 million. Actual payments will vary, but the calculation shows how higher borrowing costs can redirect household income away from consumption. The effect on the broader economy may be small, but local spending could be affected in markets with concentrations of resetting loans.
