Mortgage Rates Keep Rising as 30-Year Loan Nears 4.5%

Will mortgage rates continue to climb? Here's what to expect.

Last week, mortgage rates rose sharply in the wake of the Federal Reserve's first rate hike of the year. With six more rate hikes planned, we can expect borrowers to pay more to finance a home as the year progresses.

Here's a summary of mortgage rates for March 21:

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

30-year mortgage rates

The average 30-year mortgage rate today is 4.489%, up from 4.457% on Friday. At this pace, it won't be surprising to see the 30-year loan hit 5% before the end of the year. And it may top 4.5% as early as this week.

20-year mortgage rates

The average 20-year mortgage rate today is 4.198%, up from 4.146% on Friday. Last week, the 20-year loan surpassed 4% for the first time in years, signaling that rate hikes are impacting all loan products.

15-year mortgage rates

The average 15-year mortgage rate today is 3.621%, up from 3.592% on Friday. It won't be surprising if the 15-year loan hits 4% before the end of the year based on how much it's jumped over the past number of weeks.

5/1 ARMs

The average 5/1 ARM rate is 3.433%, a modest uptick from 3.423% on Friday. Right now, it's easy to see why a 5/1 ARM might appeal to borrowers in comparison to a 30-year mortgage. But despite the lower monthly payments a 5/1 ARM will allow for initially, in time, the rate on an ARM could climb. And since today's 5/1 ARM rate is low, it's fair to assume that rates will go up from here, so borrowers need to understand that risk.

Are the days of record-low mortgage rates gone?

There may come a point when mortgage rates drop back down and borrowers can enjoy some of the remarkably low rates they were privy to from mid-2020 through late 2021. And throughout 2022, we could have periods when rates dip to some degree. But for the most part, borrowers may need to come to terms with the fact that the days of record-low borrowing are behind us.

That said, it's important to put today's rates into perspective. Compared to the rates we saw from mid-2020 through the end of 2021, the rates above look high. But historically speaking, locking in a 30-year mortgage anywhere in the 4% range is not a bad deal at all.

Of course, borrowers looking to reap savings on a mortgage can try locking in a shorter-term loan for a lower interest rate. Or, they can take their chances with a 5/1 ARM and potentially refinance down the line.

Furthermore, borrowers should make a point to shop around with different mortgage lenders and compare their rate options. Each lender ultimately sets its own rate based on factors like borrowers' credit scores and debt-to-income ratios, so it's important to gather multiple offers before moving forward with a mortgage.