What Are 5‑Year Fixed Mortgage Rates?

When we refer to 5‑year fixed mortgage rates, we are talking about interest rates on a home loan where the rate is fixed for five years. After those five years, depending on the loan product, the rate may adjust or you may refinance. Such loans are less common in the U.S. than the traditional 15‑ or 30‑year fixed mortgages, but they do appear in products such as shorter‑term fixed loans or some refinances. Because the loan term is shorter (just five years), the rate is often lower than the longer‑term fixed alternatives, but the monthly payments will be higher and you’ll need a strategy for what happens after year five.

Why Considering 5‑Year Fixed Mortgage Rates Matters

Understanding 5‑year fixed mortgage rates matters if you:

Plan to own or keep the home for a relatively short period and want a lower rate today.
Want to finish paying off a mortgage quickly (or significantly reduce the balance in five years).
Expect rates to drop after five years and plan to refinance.
Anticipate major life changes (job relocation, children off to college) that make a five‑year horizon appropriate.

In those scenarios, locking into a five‑year fixed rate can offer advantages — but it also carries risks, which we’ll explore shortly.

Current Context: What Do the Rates Look Like?

While widespread data for U.S. 5‑year fixed mortgage rates are limited (since most borrowers opt for 15‑ or 30‑year terms), we can glean some insight:

Many major lenders and rate tables focus on 15‑ and 30‑year fixed rates. For example, one lender’s 15‑year fixed was listed around 5.75% for a well‑qualified borrower.
Some sources reveal that average ARM (adjustable‑rate mortgage) products with five‑year fixed initial periods are quoted at rates roughly 6.9% plus for the 5‑year fixed portion.
Given that 30‑year fixed rates are averaging around 6.3% as of recent data, the five‑year fixed term (if truly fixed for full five years) would likely offer a modest discount compared to 30‑year terms. For example, one report said the average 30‑year fixed rate hovered near 6.3% in early October 2025.

In short: if you can find a true five‑year fixed term, expect a rate perhaps slightly lower than the 30‑year fixed counterpart — but you’ll need to verify terms, payment size, and what happens after year five.

How the Rate for a 5‑Year Fixed Is Determined

The factors influencing 5‑year fixed mortgage rates are similar to other fixed‑rate mortgages, but with nuances due to the shorter term:

Credit Score & Borrower Profile: Same as other loans — higher credit scores and strong financials help you secure the lower advertised rate.
Loan Amount & Property Type: Larger or more exotic loans may carry higher rates even for the five‑year term.
Loan‑to‑Value (LTV) and Down Payment: More equity typically lowers the rate.
Term Length: Because the term is five years, lender risk is lower than a 30‑year loan — this often means a lower rate than for longer‑term fixed loans.
Market Conditions: Bond yields, inflation, and economic outlook still matter. If long‑term bonds are yielding high, short‑term mortgages may also be higher.
After‑Term Risk: Because the fixed term is just five years, lenders price in the risk that the borrower might refinance or the rate may reset. If this risk is higher, the rate may reflect it.

Understanding each of these helps you assess whether the quoted five‑year rate is favorable.

Advantages of a 5‑Year Fixed Mortgage Rate

Lower Rate Potential: Shorter fixed term may get you a lower rate than a 30‑year fixed loan.
Faster Equity Building: With the shorter term, more of each payment may go toward principal (depending on structure).
Flexibility: If you plan to move or refinance within five years, you avoid a decade‑long commitment.
Rate Certainty: For those five years, payments are predictable and protected from market rate increases.

If these match your financial plan, a five‑year fixed rate can be an effective strategy.

Drawbacks and Things to Watch Out For

Higher Monthly Payment: Because you’re amortizing (or preparing to) over five years, payments will be significantly higher.
What Happens After Five Years: At the end of five years, you may need to refinance or face a new rate/term. That introduces risk if rates rise.
Total Interest vs Term Tradeoff: While the rate is lower, you may still pay more in monthly payments compared to spreading over a longer term — you’ll need to budget accordingly.
Not Ideal for Long‑Term Stability: If you plan to stay for decades, a 20‑ or 30‑year fixed might make more sense for payment comfort and long‑term planning.
Refinance Risk: If you rely on refinancing at year five, you must have a workable exit strategy and expect conditions will be favorable.

These risks must be weighed before choosing a five‑year fixed mortgage path.

Who Should Consider a 5‑Year Fixed Mortgage Rate?

A 5‑year fixed mortgage rate can make sense for individuals who:

Plan to own the home or keep the mortgage for five years or less.
Expect to get a large lump‑sum payment (e.g., from business sale or inheritance) at year five and want to eliminate mortgage by then.
Want a fixed payment for five years but are comfortable refinancing or selling afterwards.
Have strong cash flow and can handle higher monthly payments in exchange for lower rate and shorter term.
Are confident that in five years, refinancing or exit options will be favorable (credit, property value, market).

If you don’t meet these criteria, you might be better served with a longer‑term fixed rate.

How to Evaluate a 5‑Year Fixed Rate Offer

When assessing an offer, look closely at:

The interest rate itself versus comparable longer‑term rates.
The monthly payment and whether it fits comfortably in your budget.
The amortization schedule — whether the loan is fully amortizing in five years or if you’ll refinance/balloon.
What happens after five years: Will you refinance? Will the rate convert to variable? Is there a balloon payment?
The closing costs, fees, or points paid up front to secure the five‑year rate.
Your exit strategy: plan for what happens at year five — selling, refinancing, or paying off.
Comparative costs and savings: Compare five‑year fixed vs 15‑year or 30‑year fixed in terms of monthly payment, total interest, long‑term flexibility.

By treating the five‑year term as a financial decision with an exit in mind, you avoid surprises later.

Current Market Outlook for 5‑Year Fixed Mortgage Rates

While comprehensive national data for 5‑year fixed loans are sparse, market indications suggest:

Because 30‑year fixed averages are around the mid‑6% range (≈ 6.3%) according to recent reports, a five‑year fixed rate might be somewhat lower, dependent on terms. Don’t assume it will be dramatically lower — the discount is modest.
Borrowers must watch the broader interest rate environment: if long‑term yields climb, shorter‑term fixed products may increase too.
Economic forecasts suggest rates may not fall substantially in the near term, meaning a five‑year fixed rate may not offer dramatically lower rates than similar options
Because fewer lenders offer true five‑year fixed terms, you may face fewer choices and less competition, which could limit how low the rate goes.

The key takeaway: if you see a five‑year fixed rate offer you like, and it aligns with your plan, it may be prudent to act rather than wait for large drops that may not arrive.

Practical Example

Suppose you borrow $200,000 on a five‑year fixed term at an interest rate of 5.0% (hypothetical). Compare to a 30‑year fixed at 6.3%.

The five‑year term will require significantly higher payments and reach full payoff (or require refinancing) quickly.
But your interest cost will be much lower overall because of the short term and lower rate.
Your monthly payment might be, for example, ~$3,773 (for a 5‑year fully amortizing loan at 5.0%).
For the 30‑year at 6.3%, monthly payment ~$1,238, but the cost over 30 years is much higher.

If you plan to refinance or have exit strategy at five years, the high payment may be acceptable in exchange for interest savings.

Steps to Secure a Good 5‑Year Fixed Mortgage Rate

Review your credit score and improve it if possible.
Choose a loan structure that fully amortizes in five years or clearly understand the exit/refinance plan.
Compare lenders that offer true five‑year fixed programs (some may treat them as ARMs or convertible).
Lock your rate once your application is processed and you’re ready — rates can move quickly.
Confirm all terms and conditions, especially what happens at year five.
Make sure your budget supports the higher payments; don’t stretch to get a slightly lower rate.

Final Thoughts

If you can commit to five years (or have a plan to refinance or move), a 5‑year fixed mortgage rate might give you a lower rate and faster equity build than longer‑term financing. But it requires a higher monthly payment, less flexibility afterwards, and a clear exit strategy.

Because many borrowers opt for 15‑ or 30‑year fixed terms, you’ll want to carefully compare whether the five‑year option truly gives you savings and fits your lifestyle.

When you’re ready to explore whether a five‑year fixed term makes sense, compare current offers, evaluate your budget and exit plan, and consult experienced lenders. Crowder Mortgage can help guide you through options, compare rates, clarify term details, and ensure your mortgage strategy aligns with your goals.