New construction

What your bank is offering is an Adjustable rate mortgage. Tell them you want a quote based on a 30-year fixed rate and then shop around with other banks for their 30-year fixed rate loans and dsee how it stacks up.

Mortgage interest rates are at record lows right now. Your bank knows that. They'll try to sucker people in with a low begining rate knowing that rates are going to rise over the life of the loan (the adjustable rates are tied to the Fed Rates so if the Fed raises rates, which they will, your rate will go up..).

With a fixed rate the rate doesn't change and you can lock it in now at the record low rates without worrying that it will skyrocket in the future.

Sounds more like a bridge loan, and I think it's normal. Surely, nobody is talking about adjustable rate mortgages with today's rates.

Oops! Just reread the question. They are talking about ARMs. Keep shopping.

Actually in construction loans they usually offer a lower than the norm rate during a specific construction time and then up to the going rate post construction.
5 years seems like ARM, Id shop around for a more specific construction loan although, with todays rates, I dont think you'd be able to get the low rate deals they used to work for this.

Thank you very much, I was just so surprised when they told us, when we spoke with them before we must have been talking about buying a place or maybe things have changed in a few months, I could never find a better property than the one we own so we decided to stay and build, I don't think the bank is budging so I will shop around, A