Toll Brothers Inc. (TOL) is bringing back the adjustable-rate mortgage: The luxury builder said Friday it is offering a 7/1 ARM for 3.75%.

The deal for contracts signed on or after Saturday is available for loans under $417,000 - the majority of the company's buyers - in many communities nationwide. It is a special that comes as ailing builders report increased traffic, but it is unclear if this will bring jittery consumers to the closing table as unemployment and foreclosures mount.

Meanwhile, the builder said it isn't worried about the reputation that ARMs have gotten, because this rate won't quickly reset with crippling or unexpectedly high payments. After the seven-year rate lock, the loan's lifetime cap is 8.75% - well above industry averages for 30-year fixed rates currently above 5%.

Given that many owners stay in a home for just a few years, "some buyers may choose not to pay that 30-year premium," said Don Salmon, chief executive of TBI Mortgage Co., Toll's mortgage subsidiary. "I think this is a viable product for many consumers."

For those staying in the house for seven years, it's a great deal, said Joe Snider, vice president and senior credit officer with Moody's Investors Service.

Should the buyer desire a 30-year fixed-rate loan, that is 4 3/8%. A true jumbo loan could get a 7/1 ARM at 4.75%. The fixed-rate for loans above $417,000, but below $729,000 is 4.5%. There are no points for consumers.

The rates, which are among the lowest the company has offered, could be pulled at any time, it said.

The continued downturn has forced builders to get creative to move inventory. They've tried everything from free vacations to paid closing costs. In January, Toll stunned the industry with a fixed 3.99% rate for 30 years, a deal that ended several months ago. The headline-grabbing rate came during a sector-wide war that saw Lennar Corp. (LEN), one of the nation's largest builders, shave its rate to 3.625%.

Toll said the 3.99% offer was successful, but many consumers instead chose a slightly higher rate that let them pick options, such as an upgraded kitchen, Salmon said. Indeed, it reported higher orders than many analysts had expected in its fiscal second quarter.

But Hovnanian Enterprises Inc. (HOV) in March said its 3.99% rate sparked "underwhelming" interest from buyers.

-Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com