Key facts
- Adjustable-rate mortgages (ARMs) are seeing a resurgence in 2026.
- Nonbank lenders are driving the increase in ARMs.
- Borrowers are exhibiting increased leverage.
- ARMs now represent 3.34% of agency loans.
- In 2021, ARMs represented 0.31% of agency loans.
- Borrowers using ARMs have lower credit scores.
- Borrowers using ARMs have higher debt-to-income ratios.
Adjustable-rate mortgages (ARMs) are on the rise in 2026, with independent mortgage banks playing a key role in this resurgence. According to Polygon Research, ARMs now constitute 3.34% of all agency loans. This represents a dramatic increase from just 0.31% in 2021, highlighting a significant shift in the mortgage market over a five-year period. The growth in ARMs is attributed to two main factors: the increased activity of nonbank lenders and a rise in borrower leverage. Borrowers utilizing ARMs in the current market are exhibiting characteristics associated with higher risk. These include lower credit scores and elevated debt-to-income ratios compared to previous periods. This suggests that a segment of borrowers is opting for ARMs, potentially to access loans they might not otherwise qualify for, or to manage initial payment affordability, while taking on greater financial risk due to the variable nature of these loans.