Is There Any Chance of Mortgage Rates Dropping in 2022?

Mortgage rates have been climbing since January. And buyers are feeling the pain.

Mortgage rates were nice and affordable from mid-2020 through the start of 2022. But over the past four months, rates have been on a steady climb, putting buyers in a tough position given that home prices are also up on a national level.

Here's a summary of mortgage rates for April 27:

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

30-year mortgage rates

The average 30-year mortgage rate today is 5.347%, down from 5.358% yesterday. A 30-year mortgage will give you lower monthly payments than a shorter-term loan. But over time, you could end up spending a lot more on interest.

20-year mortgage rates

The average 20-year mortgage rate today is 5.065%, down from 5.115% yesterday. With a 20-year loan, you'll generally snag a lower interest rate than you will with a 30-year loan. But you'll also face higher monthly payments.

15-year mortgage rates

The average 15-year mortgage rate today is 4.479%, up from 4.471% yesterday. If your goal is to score as low an interest rate as possible on a home loan, you may want to apply for a 15-year mortgage. But you'll need to make sure you can swing higher monthly payments before going this route.

5/1 ARMs

The average 5/1 ARM rate is 4.185%, down from 4.230% yesterday. A 5/1 ARM could save you money initially compared to a 30-year mortgage. But over time, your rate has the potential to rise. A 5/1 ARM may be a good bet if you're buying a starter home, or a property you don't intend to keep for very long. But if you're buying your forever home, make sure you understand the risks of taking out an adjustable-rate mortgage.

Will rates keep climbing?

The Federal Reserve has plans to implement several rate hikes this year. And while the Fed doesn't set mortgage rates, when it raises its federal funds rate, consumer interest rates tend to follow suit. As such, we should expect mortgage rates to keep rising in 2022.

This isn't to say that rates won't drop a bit from one day to the next. But at this point, it's fair to assume that the days of ultra-low borrowing are over, at least for the rest of the year.

That doesn't mean you shouldn't try to eke out savings in the course of signing a mortgage, though. If you work on boosting your credit, you might qualify for a lower borrowing rate. At the same time, it pays to seek out offers from different mortgage lenders, because you never know when one might have a better deal than another.