ARM Loans Losing Ground: Is a Fixed Rate Right for You?

Adjustable-rate mortgage originations dropped significantly in early 2026 as fixed-rate loans became more competitive. We break down what this shift means for California borrowers.

Adjustable-rate mortgages (ARMs) saw a notable pullback in early 2026, with origination volume falling around 16% compared to the prior quarter. More telling: the ARM share of total mortgage originations dipped to 15%, down from over 15% the quarter before. That may seem like a small move, but it reflects a meaningful shift in borrower sentiment.

So what's driving this? Simply put, fixed-rate mortgages became more attractive as rate trends shifted during the first couple months of the year. When the gap between ARM and fixed-rate pricing narrows, the certainty of a locked-in payment becomes a much easier sell — especially in a high-cost market like California.

For most California homebuyers, a fixed-rate loan offers peace of mind: your payment won't change, no matter what happens with interest rates down the road. ARMs can still make sense in specific scenarios — such as if you plan to sell or refinance within a few years — but you need to go in with a clear strategy.

Not sure whether an ARM or fixed-rate loan is the better fit for your goals? That's exactly the kind of question we help answer every day. Reach out to us for a free consultation and let's run the numbers together.