State-Level Adjustable-Rate Mortgage (ARM) Penetration Analysis

Adjustable-Rate Mortgage (ARM) penetration, measured as a percentage of total loan originations in each state, is sourced from Polygon Pulse's MBS Pivot. This chart reveals a regional divergence in product adoption.

The most prominent trend is the concentration of ARM usage in states with high property values. California (2.50%), Colorado (2.40%), New Jersey (2.20%), North Carolina (2.20%), Washington (2.10%), Massachusetts (1.70%), and the District of Columbia (1.30%) lead the nation. Conversely, states in the Midwest and South, such as Louisiana (0.20%), Mississippi (0.30%), and Nebraska (0.30%), show minimal ARM penetration.

ARMs are a niche product, primarily utilized as a tool for affordability in high-cost markets. In states like California and New Jersey, where jumbo loan amounts are common, an ARM can provide a significantly lower initial monthly payment, which is a critical qualifier for borrowers at the margin. In lower-cost states, the absolute dollar savings from an ARM on a smaller, conforming loan are less compelling, leading borrowers to prefer the long-term stability of a fixed-rate mortgage.

Use these ARM insights for product strategy and marketing allocation.