Today, several benchmark refinancing rates fell.
Both the 15-year fixed and the 30-year fixed saw their average rates fall. At the same time, average 10-year fixed refinancing rates also fell.
Throughout the first few months of 2022, refinance rates fell, rising dramatically. Short-term interest rates have already been raised twice by the Federal Reserve this year, with more to come.
Given the current interest rate environment, it is prudent for borrowers to take a good look at the numbers before taking out a new home loan. Right now, homeowners can struggle to find an interest rate low enough that refinancing makes sense. However, the interest rate you qualify for shouldn’t be the only factor in your decision. The fees you pay to close a home loan deal and can add up to thousands of dollars.
Let’s take a look at where refi rates stand and what that means for you.
The average mortgage refinance rates are as follows:
Check here for mortgage refinance rates in your area.
Refinance Rate Forecast: What’s Driving the Mortgage Rate Change?
In April, annual inflation was 8.3% according to the consumer price index (CPI). The price is still at the same level as the 40-year inflation highs of the past few months. And that’s bad news for refinance rates.
As inflation persists longer than expected, the Federal Reserve has started raising interest rates. There are also geopolitical events that are about to add to our inflation problems. The COVID lockdowns in China and the war in Ukraine could both exacerbate existing supply shortages. And we haven’t even started to feel these supply shocks, “it’s going to take months for these disruptions to fully seep into the supply chain,” Lindsey Piegza, chief economist at Stifel Financial told Reuters. NextAdvisor.
Because of all of this, we could be stuck with high inflation for much longer than we want, making it more likely that the Fed will have to raise interest rates aggressively.
Is it a good time to refinance now?
A rate and term refinance can save you money in the long run, but you generally want the new rate to be at least 0.75% to 1% lower than your current rate. However, as rates have risen, the number of homeowners whose rates are well above current market rates has dropped significantly.
In this hot housing 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 the fees, interest rate, and repayment schedule.
Why is it important to look at the 30-year fixed mortgage rate history?
Current mortgage interest rates are still within a normal historical range, even though they are breaking through the psychological barrier of 5%. If your current rate is higher than current rates, a refinance might be a good option.
This chart, which uses data from a Freddie Mac survey that differs slightly but generally follows the Bankrate survey used by NextAdvisor. This graph provides an overview of how today’s rates compare to those of the past two decades. They’re up from the historic lows of 2020 and 2021, but they’re still not absurdly high if you zoom out further.
Pro tip: What you need to know about refinancing fees
When you take out a new home loan, you pay an upfront fee totaling 3-6% of the loan amount. When refinancing, you need to consider this expense. Your monthly savings may not have exceeded the initial costs if you refinance too often or sell your home soon after refinancing.
30-year refi rate
Currently, the average 30-year fixed refinance has an interest rate of 5.61%, down 24 basis points from a week ago.
You can use our mortgage calculator to determine the price of your monthly mortgage payments and to understand the impact of paying more each month on your mortgage. Our Mortgage Calculator will also tell you how much interest you will be charged over the life of the loan.
Average fixed refinancing rates over 15 years
For 15-year fixed refinances, we see an average rate of 4.87%, down 24 basis points from a week ago.
The monthly payments on a 15-year refinance loan will be larger than those on a 30-year refinance at the same rate. However, a shorter loan term can help you build equity in your home much faster.
Average refinancing rate over 10 years
The average 10-year fixed refinance rate is 4.78%, down 39 basis points from what we saw last week.
Monthly payments with a 10-year refinance term would cost a lot more per month than you would with a 15-year term, but you’ll pay less interest in the long run.
How we determine refi rates
The chart below shows where refinance rates have headed over the past week.
These daily refi rates are provided by Bankrate. The information is based on borrowers who meet specific criteria, such as the home being an owner-occupied single-family residence. You will therefore be entitled to different rates if your financial situation does not correspond to the criteria of the survey.
Bankrate is owned by Red Ventures, the parent company of Nextadvisor.
Rates as of July 5, 2022.
Take a look at mortgage refinance rates for a number of different loans.
Frequently asked questions (FAQ) about the refinance rate:
Is it still a good time to refinance?
Refinance rates are still quite low even though they are up from recent record lows. A lower rate can lower your mortgage payment, so if you haven’t refinanced in the past few years, today’s low interest rates may be a good time to do so.
You also need to consider other factors when deciding if it’s the right time for you to refinance. Refinancing into a new home loan can add years to your mortgage. If you’re about to pay off your current mortgage, then you’ll want to consider trade-offs. Depending on the length of your current mortgage, you may not want a 30-year refinance loan. Keep in mind that your monthly payment will be higher with a short-term refinance than with a longer-term loan.
Be sure to consider all factors before refinancing, not just the interest rate.
How to qualify for the lowest refi rate
Your personal situation has a big impact on the refinance rate you get. Having more equity in your home and a higher credit score will usually get you a lower refinance rate.
Your personal finances aren’t the only thing that will impact the refinance rates you are offered. A lower loan-to-value (LTV) ratio can help you get a lower refinance rate. So it is better to have more equity. You want to have at least 20% equity or a loan-to-value ratio of 80% or less.
The type of mortgage can determine your refinance interest rate. A shorter term refinance loan generally has lower refinance rates than loans with a longer repayment term, all other things being equal. Your refinance rate also depends on the type of mortgage refinance you plan to take out. A cash refinance loan generally has a higher refinance rate than other types of refinance loans.
How much does it cost to refinance?
Refinancing a mortgage usually involves paying closing costs of 3% to 6% of the loan amount. For example, if you have a $300,000 mortgage, you can expect to pay between $9,000 and $18,000 in closing costs.
But, each lender will assess your personal situation differently. It is therefore important to shop around and compare offers. Everything from the location of the property to the type of loan you are refinancing can change what you will pay to refinance.
Mortgage interest rate by type of loan
Mortgage refinance rate
House purchase prices
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