A relatively small group of U.S. homeowners is approaching a large personal cash-flow shock. ICE Mortgage Technology estimates that about 150,000 adjustable-rate mortgages, or ARMs, face their first interest-rate reset in 2026. For some seven-year loans originated in 2019, the median monthly payment increase could reach $1,080.
Why the reset is so sharp
An ARM starts with a fixed introductory rate and later moves according to a benchmark plus a contractual margin. Caps limit how much the rate can change at the first reset, at later resets and over the life of the loan. That structure protects borrowers from an unlimited one-time jump, but it does not prevent a material increase when market rates are far above the original coupon.
ICE data cited by CNBC shows that seven-year ARMs originated in 2019 and resetting from August through December carried a median initial rate of 3% and a median unpaid balance of $548,000. Based on current rates and contractual caps, the median adjusted rate is estimated at 6.06%. The resulting $1,080 monthly increase equals $12,960 a year before any later reset.
The effect is not uniform. Borrowers with three-year ARMs originated in 2023 had a median initial rate of 8.38% and a much smaller median balance of $136,000. Their estimated reset to 7.71% would reduce the median payment by $124 a month. The direction depends on the loan's starting rate, balance, index, margin and caps.
A concentrated household risk
ICE says 3.1 million active first-lien ARMs represent 5.6% of active mortgages. Only 1.05 million have reached their adjustable phase, while roughly 2.05 million remain in the initial fixed period. The numbers argue against treating the reset wave as a broad mortgage-system shock, but they do not make the burden small for affected households.
Borrowers receive advance notices before the first adjusted payment. Refinancing can replace uncertainty with a fixed rate, although closing costs commonly equal 2% to 5% of the new loan amount. Keeping the ARM may be rational for a borrower who can absorb volatility or expects rates to fall, while a loan modification or housing counseling may be more relevant when the higher payment is unaffordable.
The next useful data are delinquency and refinance behavior among the resetting cohorts. A rise in missed payments would show that the pressure is moving from household budgets into credit performance. Stable delinquencies would support ICE's view that the exposure is limited despite severe increases for some borrowers.