Are We About to Enter the Age of 5% Mortgage Rates?

Mortgage rates are at 5% for the 30-year loan. Could they get stuck there?

Mortgage rates have been rising since the beginning of 2022, and they rose sharply in March after the Federal Reserve announced its first rate hike of the year. With more planned rate hikes in store, there's a good chance mortgage rates will continue to climb. But what exactly will that mean for borrowers?

Here's a summary of mortgage rates for April 11:

Data source: The Ascent's national mortgage interest rate tracking.

30-year mortgage rates

The average 30-year mortgage rate today is 5.013%, up from 4.964% on Friday. This is the first time the 30-year mortgage has reached 5% in years.

20-year mortgage rates

The average 20-year mortgage rate today is 4.667%, up from 4.594% on Friday. It's not inconceivable to think that the 20-year loan will reach 5% this year.

15-year mortgage rates

The average 15-year mortgage rate today is 4.097%%, up from 4.047% on Friday. The 15-year loan could get stuck in the 4% range for months.

5/1 ARMs

The average 5/1 ARM rate is 3.989%, down from 4.033% on Friday. Borrowers can save money initially with an adjustable-rate mortgage, but it's important to recognize the risks of not having a fixed loan. After five years, the rate on a 5/1 ARM can start to climb, making payments more expensive.

Will 5% mortgage rates become the norm?

The average 30-year mortgage rate had been creeping closer to 5% since March. And now, we're at just over 5%.

But what happens from there? Will the 30-year loan get stuck in the 5% range, or can borrowers expect rates to creep back downward?

The latter may happen eventually -- but maybe not in 2022. The Federal Reserve still has several federal funds rate hikes planned for the year. Now the Fed doesn't set mortgage rates, but its actions can influence them heavily. And so borrowers could get stuck with higher rates for many months.

That's why shopping around for a mortgage will be very important this year in particular. Those looking to finance a home should seek out offers from multiple mortgage lenders to see which ones are the most competitive.