73% of U.S. mortgage borrowers currently have an interest rate below 5.0%

Before borrowing costs surged, a remarkable 85.5% of U.S. mortgage borrowers had interest rates below 5.0% in Q1 2022.

However, as mortgage rates remain "higher for longer," that share continues to shrink. Most new borrowers are now predominantly taking out loans with rates with a 6-handle or 7-handle.

Indeed, according to newly released third-quarter data from the FHFA, 73.3% of U.S. mortgage borrowers currently have interest rates below 5.0%. This marks a 12.2 percentage-point decline from the historic Q1 2022 level (85.5%).

Now let’s flip the data.

Among outstanding mortgage borrowers, here’s the share with a mortgage rate at or above 6.0%:

Q3 2013 —> 29.0% 📉

Q3 2014 —> 25.0% 📉

Q3 2015 —> 21.7% 📉

Q3 2016 —> 17.8% 📉

Q3 2017 —> 15.2% 📉

Q3 2018 —> 13.1% 📉

Q3 2019 —> 11.5% 📉

Q3 2020 —> 9.9% 📉

Q3 2021 —> 8.1% 📉

Q3 2022 —> 7.5% 📉

Q3 2023 —> 12.2% 📈

Q3 2024 —> 17.2% 📈

As more borrowers take out mortgages with rates in the 6% and 7% range, the mortgage industry may see opportunities for "refi boomlets." A notable example occurred in September 2024, when the average 30-year fixed mortgage rate briefly dropped to 6.11%, prompting some borrowers with recent high-rate loans to refinance and secure payment relief.

Today, we received the first average 30-year fixed mortgage rate reading of 2025, which came in at 7.07%.

Here are the first readings of the year over the past decade:

2015 —> 3.80%

2016 —> 4.02%

2017 —> 4.18%

2018 —> 4.05%

2019 —> 4.55%

2020 —> 3.74%

2021 —> 2.76%

2022 —> 3.29%

2023 —> 6.45%

2024 —> 6.72%

2025 —> 7.07%

Among the 14 rate forecasts we track for ResiClub PRO members, the average model expects the 30-year fixed mortgage rate to finish 2025 at 6.34%.

Keep in mind that economic forecasting has never been easy, and it becomes even more challenging coming out of a period with unprecedented events like COVID-19 lockdowns and extraordinary levels of fiscal and monetary intervention.