Mortgage Rates Are on the Rise, but Buyers Aren't Doomed

Mortgage rates are on an upward swing, but all isn't lost.

Mortgage rates have been rising sharply since the start of the year. And following the Federal Reserve's rate hike announcement last week, they're already up considerably.

Here's a summary of mortgage rates for March 23:

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

30-year mortgage rates

The average 30-year mortgage rate today is 4.586%, up from 4.531% yesterday. Last year, experts predicted that the 30-year loan would hit 4% by the end of 2022, and that seemed like a huge jump from 2021 levels. Clearly, rates have since exceeded expectations -- but not in a good way for borrowers.

20-year mortgage rates

The average 20-year mortgage rate today is 4.299%, up from 4.269% yesterday. The 20-year loan could easily reach 4.5% this year at this pace.

15-year mortgage rates

The average 15-year mortgage rate today is 3.701%, up from 3.671% yesterday. At this pace, the 15-year loan could reach 4% during the first half of 2022.

5/1 ARMs

The average 5/1 ARM rate is 3.483%, up from 3.435% yesterday. Last year, adjustable-rate mortgages made little sense because fixed-rate loan products were so affordable. This year, borrowers may want to consider an adjustable-rate mortgage due to the significant savings involved.

Will 2022 be a bad year to buy a home?

The fact that mortgage rates have jumped so substantially from the start of the year may be alarming to buyers. And unfortunately, mortgage rates could continue to climb as a result of the Fed's plans to implement additional rate hikes during the year.

But that doesn't automatically mean that 2022 will be a bad time to purchase a home. Right now, buyers are looking at extremely high home prices. But if rising mortgage rates cause a notable drop in buyer demand, home prices should start to come down. As such, we might run into a situation where higher mortgage rates and lower home prices are able to cancel each other out on the affordability front.

Of course, whether 2022 ends up being a good year for home buyers will also hinge largely on housing inventory. Right now, listings are at a low. But if more properties hit the market this year, that, too, could help bring home prices down.

Ultimately, buyers this year will need to gear up for higher borrowing rates. But that doesn't mean it's time to give up on purchasing a home. And those who are hoping to buy this year might still reap savings by shopping around with different mortgage lenders and seeing which ones have the best deals to offer. Lenders may also be willing to negotiate on closing costs in today's interest rate environment, so it's worth doing a lot of research in the course of financing a home purchase.