The first number is the period of time for which the mortgage is fixed. The second numner is the period of time each successive adjustment takes place. Therefore each of the above stated program has a fixed period from 2 to 10 years but each adjusts each year afterwards.
ARM programs have 3 components. The starting rate, the margin and the index. The starting rate is the rate that one is quoted or sold on for the first number of years the mortgage is fixed. The mortgage index is the basis for each of these loans. The most common indices are the LIBOR, MTA, COFI & T-Bill. The margin is how the bank makes their money off each ARM.
When one obtains an ARM the disclosure that has to be included in the closing package will describe when the ARM adjusts, what the index and the margin of the ARM are, and any caps that on place. The caps are what the most an ARM can go up to during the overall term of the mortgage as well as how much the ARM can adjust during any adjustment period. For instance - a lifetime cap may be 15% whereas a term cap could be 2%. Therefore, if a 2/1 ARM that starts out at 5% could potentially adjust up to 7% the beginning of the 3rd year, 9% the beginning of the 4th year and a max of 15% by the seventh year. This would represent a three-fold increase in one's mortgage payment.
Of course, all of this is predicated upon how quickly the index increases over the period of time in question. Each index is either referred to as a leading index or a lagging index. The leading indices such as the LIBOR & MTA react to how the bond market is currently performing. Lagging indices, such as COFI, 6 month T-Bill & COSI, respond to what has occurred over a period of time. In a market where the Federal Reserve, or FED, is dropping rates then a leading index might be the best to have. A market in which the FED is raising rates, then a lagging index may be better as rates will not be rising so quickly.