Does Fate's Favored allow Fated Bloodrager to go over the +5 cap?
Whenever you are under the effect of a luck bonus of any kind, that bonus increases by 1.
At 4th level, you gain a +1 luck bonus to AC and on saving throws. At 8th level and every 4 levels thereafter, this bonus increases by 1 (to a maximum of +5 at 20th level).
Yes, such maxima only note the limit of the progression, not of the total bonus the character can have. In cases like this, where the maximum is archieved only at the last upgrade you can have from class levels, it serves more as an indication of the right calculation (i.e. if you calculate having a 6 bonus at 20th level from the class feature alone, you know there must be an error in the calculation).