Multiple mortgage rates fell today after the Federal Reserve announced a 75 basis point increase in its benchmark short-term interest rate on Wednesday.
Let’s take a look at current refinancing rate trends.
Take a look at today’s refinance rates:
Take a look at local refinancing rates.
Where are the refinancing trends?
In April, annual inflation was 8.3% based on the Consumer Price Index (CPI). It still puts it level with the 40-year highs we’ve experienced in recent months. And that means refinancing rates are likely to see further increases as long as inflation remains high.
With high inflation persisting longer than initially expected, the Federal Reserve has started to raise interest rates. There are also geopolitical events that are about to add to our inflation problems. China’s COVID lockdowns and the war in Ukraine could exacerbate existing supply shortages. These issues haven’t even hit the US yet, “it will take months for those disruptions to fully seep into the supply chain,” Lindsey Piegza, chief economist at Stifel Financial, told NextAdvisor.
All of this means we could be stuck with high inflation for longer than we’d like, increasing the likelihood that the Fed will need to be aggressive in raising rates.
Is it a good time to refinance right now?
As a general rule, refinancing can save you money if you can lock in an interest rate that is about 1% lower than your current rate. However, as rates have increased, the number of homeowners with rates well above current market rates has dramatically decreased.
In this booming real estate market, the ability to turn your home equity into cash with a Home Equity Line of Credit (HELOC) has become increasingly popular. A HELOC can be a reasonable option for financing home repairs or improvements, just make sure you understand all the fine print, regardless of fees, interest rate, and payment schedule.
History of the 30-year fixed mortgage rate
Current mortgage interest rates are still within a normal historical range, even if they are breaking through the 5% psychological barrier. If your current rate is higher than current rates, then a refinance might be a good option.
Historical rate trends shown in this chart refer to data compiled by Freddie Mac. NextAdvisor generally uses rate information compiled by Bankrate. Although these mortgage rate surveys differ, they tend to show the same trends.
Pro Tip: Pay Attention to Refinance Fees
Closing costs are the fees you pay when you refinance a mortgage. Closing costs on a loan can range from 3% to 6% of the loan amount, making them a costly expense. Your monthly payment may go down with a refinance, but be sure to hold on to the loan long enough for ongoing savings to outweigh your out-of-pocket costs.
30-year fixed refinance rates
Right now, the average 30-year fixed refinance carries an interest rate of 5.89%, an increase of 36 basis points from the previous week.
You can use our mortgage calculator to determine how much your mortgage will cost each month and understand how paying more each month will affect your mortgage. Our mortgage calculator will also show you how much interest you’ll be charged for the entire term of the loan.
Average 15-year refinance rates
Right now, average 15-year fixed refinance rates are 5.10%, an increase of 35 basis points from a week ago.
Monthly payments on a 15-year refinance loan will be higher compared to a 30-year refinance at the same rate. However, a shorter loan term can save you thousands of dollars in interest over the life of the loan.
10-year fixed refinance rates
The average 10-year fixed refinance rate is 5.16%, an increase of 50 basis points from the rate seen during the previous week.
Monthly payments with a 10-year refinance term would cost even more than what you would pay on a 15-year loan. The advantage is that you will end up paying less interest over the life of the loan.
How We Determine Refinancing Rates
Our refinance interest rates are based on daily rate data from Bankrate, owned by the same parent company as NextAdvisor. These daily average rollover rates are based on a customer profile of the following:
- 80% LTV or less
- owner occupied house
- Credit score 740 or higher
- Single family Home
Information provided to Bankrate by lenders across the country is shown in the following table:
Rates as of June 16, 2022.
Take a look at mortgage refinance rates for several different loans.
Frequently Asked Questions (FAQ) about the refinancing rate:
Is it still a good time to refinance?
Refinance rates are still quite low even though they are above recent record lows. Now might still be the right time to refinance if you want to lower your mortgage payment by refinancing to a lower rate.
However, your interest rate isn’t the only factor to consider when determining if now is the right time to refinance. Refinancing a new home loan can add years to your mortgage. If you’re close to paying off your existing mortgage, then you’ll want to consider trade-offs. Depending on how long you’ve had your current mortgage, you may not want a 30-year refinance loan. If you opt for a shorter-term refinance, the trade-off is that your monthly payment will be higher than with a longer-term loan.
Before you opt for an exceptionally low refinance rate, make sure the overall deal makes sense to you.
How to make sure you get the best refinance rate
Mortgage refinance rates vary based on your personal financial situation. If you have a higher credit score and a better loan-to-value (LTV) ratio, you’ll usually get a bigger reduction in your interest rate.
Your situation isn’t the only thing that will affect your mortgage refinance rate. The amount of equity you have in the home also comes into play. Ideally, you should have at least 20% equity in your property.
The type of mortgage loan will affect your refinance rate. A short-term refinance loan generally has better refinance rates than a long-term loan. Your refinance rate is also affected by the type of refinance loan you plan to take out. A cash-out refinance loan generally carries a higher interest rate than other types of mortgage refinances.
How much does refinancing cost?
If you refinance your mortgage, closing costs generally range from 3% to 6% of the loan amount. For a $300,000 loan, that’s $9,000 to $18,000 in fees.
There are a number of factors that different lenders consider when evaluating your situation. Compare your options and compare prices. Everything from the location of the home to the type of loan you’re refinancing could affect your upfront costs.
Mortgage rates by loan type
Mortgage Refinance Rates
Home Loan Interest Rates