Today, a few closely watched refinance rates have come down.
Both the 15-year fixed and the 30-year fixed saw their average rates decrease. The average 10-year fixed rate refinance mortgage rate also fell.
At the start of this year, refinancing rates soared and look set to continue their upward trajectory. Short-term interest rates have already risen several times, and the Fed expects to do so again in the coming months.
A borrower should carefully consider the numbers before taking out a new mortgage in the current interest rate environment. In other words, the cost of refinancing increases because the rates are higher. However, the interest rate you qualify for shouldn’t be the only factor in your decision. Closing costs for a refinance loan can run into the thousands of dollars, significantly increasing your upfront costs.
Let’s take a look at current trends in refinance rates.
Take a look at today’s refinance rates:
You can find the right refinance rate for you here.
Trends in refinancing rates
The consumer price index (CPI) for April shows a slight drop in annual inflation to 8.3%. The price is still at the same level as the 40-year inflation highs of the past few months. And that’s not good for refinance rates.
With high inflation persisting for longer than originally 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 the impact of these events on inflation may not be felt right away. “The pain of the April and March lockdown is not yet fully felt in the manufacturing sector outside of China,” Lindsey Piegza, chief economist at Stifel Financial told NextAdvisor.
A prolonged period of high inflation would make the Federal Reserve more likely to raise rates dramatically.
Is refinancing now a good idea?
Generally, refinancing can save you money if you can get an interest rate about 1% lower than your current rate. That said, the recent spike in refinance rates has dramatically reduced the number of homeowners with interest rates well above today’s average rates.
There are alternatives to refinancing. With values rising in today’s housing market, homeowners may want to turn that value into cash. With the rates where they are, a home equity line of credit (HELOC) may be right for you because you won’t have to take out a new mortgage. In some situations, a HELOC can make sense, especially when consolidating debt or renovating your home.
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%. It might be a good idea to refinance if your current interest rate is higher than today’s rates.
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
Closing costs are the fees you pay when you refinance a mortgage. Fees can average 3% to 6% of your loan balance, so it’s important to pay attention. Even though your monthly payment may be lower, keep an eye on how long it will take for your monthly savings to exceed what you paid to refinance.
Average fixed refinancing rates over 30 years
Right now, the average 30-year fixed refinance has an interest rate of 5.69%, down 4 basis points from what we saw last week.
You can use our mortgage calculator to get an idea of what your monthly payments will be and to understand how much you could save if you made additional payments. 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 4.93%, down 1 basis point from the previous week.
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 save you thousands of dollars in interest over the life of the loan.
Average 10-year fixed refinancing rates
The average 10-year fixed refinance rate is 4.81%, down 11 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 refinance rates
Our daily refinance rates are based on daily rate data from Bankrate, which is owned by the same parent company as NextAdvisor. These daily refi rate averages are based on a borrower profile that meets these criteria:
- 80% LTV or less
- Principal residence
- Credit score 740 or higher
- Single-family detached house
Information provided to Bankrate by lenders nationwide is provided in the table below:
Rates as of July 18, 2022.
Take a look at mortgage refinance rates for a number of different loans.
Frequently asked questions (FAQ) about the refinance rate:
Should I refinance now?
While refinance rates are higher than recent record lows, they are still exceptionally low. If you haven’t refinanced in the past few years and want to lower your mortgage payment, now is the time to do so.
However, you shouldn’t rely on the interest rate alone to determine if it’s time to refinance. In addition to the number of years remaining on your existing mortgage, the new repayment term will impact your decision. If you’ve been paying off your current mortgage for 10 years, you might want to refinance with a 20-year loan so you don’t add years to the end of your loan. Keep in mind that your monthly payment will be higher with a short-term refinance than with a longer-term loan.
Make sure the overall deal makes sense before you take advantage of today’s low refinance rates.
How to get the best refi rate
Your finances have a big effect on the refinance rate you can qualify for. Having a lower loan-to-value ratio for your home and a better credit rating will usually get you a better refinance rate.
Your situation isn’t the only factor that affects the refinance rate you qualify for. The amount of equity you have in the home also comes into play. Having at least 20% equity in your property is ideal.
The type of mortgage will impact your mortgage refinance rate. A shorter term refinance loan usually has lower interest rates than a longer term loan. Additionally, if you want to get cash out of your home with a cash refinance, you should expect to pay a higher mortgage rate for the privilege.
Average cost of refinancing
Several factors affect the cost of refinancing, including:
- Where you live
- Type of refinance loan
- Which lender to choose
- Amount of the loan
- Credit score
- The equity you have in the home
Typically, refinance closing costs are 3% to 6% of the loan balance. The type of loan you refinance can impact its cost in different ways. Some government-backed refinance loans, like the FHA Streamline or the VA Interest Rate Reduction Refinance Loan (IRRRL) may not require an appraisal, but may come with high upfront fees to cover mortgage insurance. On the other hand, if you have sufficient equity, you can refinance into a conventional loan to eventually get rid of the mortgage insurance requirement.
Current Mortgage Rates by Loan Type
Mortgage refinance rate
Mortgage rate
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