As mortgage rates climb, homebuyers are increasingly turning to adjustable-rate mortgages (ARMs) to minimize their monthly payments. These loans, which offer lower interest rates than fixed-rate options, have been gradually gaining market share, reaching 7.8% of mortgage demand last week, the highest level of the year. The average contract interest rate for ARMs has also declined, standing at 6.60%. Experts attribute this trend to stubbornly high inflation, which is pushing mortgage rates higher. Despite the resurgence of ARMs, overall mortgage demand has decreased, with applications for refinancing and home equity loans also falling. Meanwhile, applications from potential homebuyers have dropped by 14% year-over-year.