Current Mortgage Refinance Rates, August 1, 2022 | Rates Drop More After Fed Hike

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Today, a few notable refinance rates receded.

Both the 15-year fixed and 30-year fixed saw their average rates drop. The average rate on 10-year fixed refinance mortgages also decreased.

As of early this year, refinance rates spiked and appear likely to continue on their upward trajectory. Short-term interest rates have already increased multiple times, and the Fed plans to do so again in the coming months.

Given the current rate environment, it is prudent for borrowers to look hard at the numbers before taking out a new home loan. Right now, homeowners may struggle to find an interest rate low enough for refinancing to make sense. However, the interest rate you are eligible for shouldn’t be the only factor behind your decision. The fees you pay to close a home loan matter, and can add up to thousands of dollars.

Let’s take a look at the current refi rate trends.

Here are the average rates for 30-year, 15-year, and 10-year refinance loans are:

Check out mortgage refinancing rates for your area here.

Refinance Rate Trends

The annual inflation rate came in it at 9.1% in June, according to the data from the Bureau of Labor Statistics. This still puts it on par with the 40-year highs we’ve seen in the past few months. And that’s not good for refinance rates.

With high inflation lingering longer than initially expected the Federal Reserve has begun raising interest rates. There are also geopolitical events that are poised to add to our inflation woes. China’s COVID lockdowns 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 those disruptions to seep fully into the supply chain,” Lindsey Piegza, chief economist at Stifel Financial told NextAdvisor.

If we end up with high inflation for an extended period of time, then the chances that the Federal Reserve dramatically increases rates goes up.

Is Refinancing Now a Good Idea?

A rate and term refinance can save you money in the long run, but typically you’ll want the new rate to be at least 0.75% to 1% below your current rate. And the number of homeowners with rates well above the current market rates has dwindled dramatically as rates have risen.

There are alternatives to refinancing. With values rising in today’s housing market, homeowners may want to turn that value into cash. With rates where they are, a home equity line of credit (HELOC) may make sense for you because you won’t have to take out a new mortgage. A HELOC can be a reasonable option for financing home repairs or improvements, just be sure to understand all of the fine print regardless fees, the interest rate and the repayment schedule..

Pro Tip: Refinance Closing Costs

You will pay upfront fees of 3% to 6% of your loan amount when you take out a new home loan. If you refinance, this is a significant expense you should take into account. Refinancing often or selling a house soon after refinancing can result in your monthly savings not exceeding the fees you paid.

Average 30-Year Fixed Refinance Rates

Right now, the average 30-year fixed refinance has an interest rate of 5.27%, a decrease of 32 basis points over the previous week.

You can use our mortgage calculator to determine how much your mortgage will cost you every month and to understand what the effects of making extra payments would be. Our mortgage calculator will also show you how much interest you’ll be charged over the entire loan term.

15-Year Fixed Refinance Rates

Currently, the average rate for a 15-year fixed refinance loan is 4.58%, a decrease of 27 basis points over the previous week.

Monthly payments on a 15-year refinance loan will be bigger compared to a 30-year refinance at the same rate. However, a shorter loan term can help you build up equity in your home much more quickly.

10-Year Refinance Rates

The average 10-year, fixed refinance rate is 4.49%, a decrease of 25 basis points from what we saw last week.

Monthly payments with a 10-year refinance term would cost even more than what you’d pay on a 15-year loan. The upside is you’d end up paying even less interest over the life of the loan.

How we calculate our refinance rates

The table below shows refinance rates trends from the past week.

These refinance interest rates are collected by Bankrate. The information is based on homeowners that meet specific criteria, such as the home is an owner occupied single family residence. So you’ll be eligiblefor different rates if your financial situation don’t align with the survey criteria.

Bankrate is owned by Red Ventures, Nextadvisor’s parent company.

Average refinance interest rates
ProductRateLast weekChange
30-year mortgage refinance rate5.27%5.59%-0.32
15-year fixed refinance rate4.58%4.85%-0.27
10-year fixed refinance rate4.49%4.74%-0.25

Rates as of August 1, 2022.

Take a look at mortgage refinance rates for a number of different loans.

Pro Tip

Use our mortgage refinance calculator to run the numbers on what a refi could do for your financial situation.

Refinance Rate Frequently Asked Questions (FAQ):

Does Refinancing Still Make Sense?

While refinance rates are higher than recent record lows, they are still exceptionally low. A lower rate can reduce your mortgage payment, so if you haven’t refinanced in the past few years, today’s low interest rates can make now a good time to do so.

Nevertheless, you should not solely rely on the interest rate when determining whether it is time to refinance. You’ll also need to weigh how long you have left to pay off your current mortgage and to consider the repayment term of a new home loan. Depending on how long you’ve had your current mortgage, you may not want a 30-year refinance loan. Keep in mind, your monthly payment will be higher with a shorter-term refinance than with a longer-term loan.

Before you jump on an exceptionally low refinance rate, be sure that the overall deal makes sense for you.

How to Qualify for the Lowest Refi Rate

Your finances have a big impact on the refinance rate you get. Having more equity in your home and a healthier credit score ordinarily will get you a lower refinance rate.

Your personal finances aren’t the only factor that impacts the interest rates you’re offered. The equity you have in the home also comes into play. You want to have at least 20% equity, or a loan-to-value ratio of 80% or less.

The type of mortgage loan will impact your refinance interest rate. A shorter-term refinance loan typically has better rates than mortgage refinance loans with longer repayment terms, all else equal. The type of refinance you need makes a difference in the mortgage refinance rate. A cash-out refinance loan usually comes with a higher refinance interest rate than other types of home loan refinancing.

How Much Does Refinancing Cost?

There are a number of factors that influence the cost of refinancing, including:

  • Location
  • Type of the mortgage
  • The lender
  • Loan amount
  • Your credit score
  • The equity you have in the home

In general, refinance closing costs are 3% to 6% of the loan balance. Your state and local regulations can influence what fees and taxes you pay. Having more equity in the home and a higher credit score will make it easier to qualify for the refinance loan, secure a lower rate, and to get lenders to compete for your business.

Mortgage Rates by Loan Type

Mortgage Refi Rates

Home Purchase Rates