Mortgage Rate Update: A Federal Reserve Rate Hike Contributes to Rising Rates

Mortgage rates have been on the rise, and the Federal Reserve has now raised the short-term interest rate. Here's what that means for you.

On March 17, 2022, mortgage rates increased. Rates have been on the upswing, and recent news from the Federal Reserve isn't likely to help matters. Here are today's average rates.

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

30-year mortgage rates

The average 30-year mortgage rate today is 4.421%, up from yesterday's average of 4.358%. While the rate on this loan is the highest of the fixed-rate options, the long repayment timeline leads to more affordable monthly payments.

20-year mortgage rates

The average 20-year mortgage rate today is 4.136% compared with 4.054% yesterday. Despite the lower rate, monthly payments would be higher than on the 30-year loan because you make a decade less payments. But total costs over time will be lower.

15-year mortgage rates

The average 15-year mortgage rate today is 3.570%, while yesterday's average was 3.522%. Although this loan is very affordable over time compared to those with longer repayment timelines, each monthly payment is higher.

5/1 ARMs

The average 5/1 ARM rate is 3.378% -- also an increase from yesterday's average of 3.443%. This is a risky loan because the rate is locked in for just five years. It can increase after, making your mortgage more expensive.

The Federal Reserve's rate increase could cause rates to continue climbing

Mortgage rates are much higher than at the start of the year, and are likely to increase further. This is especially true in light of the recent announcement that the Federal Reserve is increasing the overnight rate at which banks lend to each other. The rate will increase from close to 0% to between 0.25% and 0.5%.

While mortgage rates follow 10-year Treasury yields more closely than the overnight rate because mortgage-backed securities and Treasury bonds compete for the same investors, the Fed's decision still affects access to credit and is likely to contribute to rising rates.

That makes it more important than ever to search for loans by comparing quotes among several of the best mortgage lenders to try to find the best possible deal as the cost of borrowing increases.