How Do Rising Mortgage Rates Affect Would-Be Homeowners?

With mortgage rates going up, qualifying for a loan could be harder and monthly payments could be higher -- but the news isn't all bad.

Mortgage rates have been steadily on the rise this year, and this trend is likely to continue for the foreseeable future -- especially as the Federal Reserve has raised interest rates once already and has indicated it will do so again this year.

Check out today's average mortgage rates, and learn about what these rate increases could mean for you if you're thinking about buying a property.

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

30-year mortgage rates

The average 30-year mortgage rate today is 4.843%. Although this rate is higher than on some loans with shorter terms, the 30-year mortgage remains popular because the long payoff time makes monthly payments more affordable.

20-year mortgage rates

The average 20-year mortgage rate today is 4.544%. This loan has higher monthly payments than the 30-year loan because of the shorter payoff time, but you won't pay as much over the life of the loan and you'll be debt free a decade sooner.

15-year mortgage rates

The average 15-year mortgage rate today is 3.958%. Although this is the most affordable loan over time, and the rate is lower than its counterparts, this loan is considerably more expensive each month.

5/1 ARMs

The average 5/1 ARM rate is 3.760%. You are guaranteed this rate for just the first five years. After that, rates adjust and could rise.

How do rising rates affect home buyers?

Rising mortgage rates affect home buyers in a few key ways. Here are some of the potential impacts:

• Monthly loan payments are higher. When rates rise, each month's interest payment goes up. This increases the amount a borrower must pay monthly to cover financing charges.
• Total loan payoff costs are higher. Just as monthly payments increase, so do total payoff costs over time.
• Qualifying for a loan may be more challenging. Lenders evaluate your monthly payment relative to your income when deciding whether to approve you for a loan. If your monthly payment is higher because of the increased interest rate, it may be more difficult to get approved to borrow.
• Home prices may fall. If rising rates cause reduced demand for homes, it's possible that prices will fall for housing.

Since the cost of borrowing may be higher due to rising rates, it will be more important than ever to shop for the best mortgage lenders to get the most affordable home loan possible.