The initial interest rate on an adjustable-rate mortgage is often:

The initial interest rate on an adjustable-rate mortgage (ARM) is often lower than the prevailing market rate to attract borrowers. This lower starting rate can make it more appealing compared to fixed-rate mortgages, as it allows homeowners to secure a mortgage at a more affordable initial payment.

Typically, the adjustable-rate mortgages then have a set period during which the interest rate remains fixed, after which it adjusts according to a particular index. This rate often resets to the market rate as the adjustment periods kick in, meaning the initial attraction of a lower rate can be outweighed by potential increases in the future.

Choosing an initial interest rate that is lower than the market rate helps lenders to compete for borrowers, incentivizing them to choose an ARM over a traditional fixed-rate mortgage, particularly in a market where interest rates are higher.