how are 5 6 hybrid arms indexed 
lenders use different indexes to set interest rates on 5 6 hybrid arms the u s prime rate and constant maturity treasury cmt rate are commonly used in a rising interest rate environment the longer the period between interest rate reset dates the better it will be for the borrower a 5 1 hybrid arm would be better than a 5 6 arm because its interest rate would not rise as quickly the opposite would be true in a falling interest rate environment 5 6 hybrid arm vs fixed rate mortgagemany adjustable rate mortgages including 5 6 hybrid arms start with lower interest rates than fixed rate mortgages providing the borrower with a significant savings advantage especially if they expect to sell the home or refinance their mortgage before the fixed rate period of the arm ends borrowers should ensure that the lender doesn t impose costly prepayment penalties for getting out of the mortgage early the 5 6 hybrid arm comes with interest rate risk because the interest rate can increase every six months after the first five years the monthly payments may become unaffordable for the borrower with a fixed rate mortgage the interest rate will never rise the interest rate risk is mitigated if the 5 6 hybrid arm has periodic and lifetime caps on any interest rate increases 