Today, a few notable refinance rates slumped.
Both the 15-year fixed and 30-year fixed saw their average rates slump. The average rate on 10-year fixed refinance mortgages also sank.
Throughout the first months of 2022 refinance rates have been on a tear, increasing dramatically. We’ve already seen multiple increases in short-term interest rates and the Fed has plans for more to come.
Right now, it’s as important as ever for homeowners to carefully consider whether or not now is the right time to refinance. 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 interest you’re paying over time is one thing, but the upfront closing costs can be 3% to 6% of the loan amount. That’s potentially thousands of dollars in fees.
Here’s where refinance rates are today .
Here are the average rates for 30-year, 15-year, and 10-year refinance loans are:
- 30-year fixed refinance rates are averaging 5.27%
- Today, the average 15-year fixed refinance rate is 4.57%
- Currently, the average 10-year fixed-rate refinance is 4.51%
Refinance Rate Forecast: What Is Driving Mortgage Rate Change?
June’s Consumer Price Index (CPI) reported annual inflation increased again in July to 9.1%. . The price still stands on par with the 40-year inflation highs of recent months. And that’s not good for refinance rates.
To fight high inflation the Federal Reserve has been raising short-term 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. These issues haven’t even hit the U.S. yet, “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 It a Good Time to Refinance Right Now?
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. However, as rates have risen, the number of homeowners with rates well above current market rates has diminished dramatically.
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. In some situations, a HELOC can make sense, especially when consolidating debt or remodeling your home.
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. When refinancing, you need to consider this expense. When you refinance frequently or sell your home soon after refinancing, you may not experience enough savings to justify the upfront fees.
30-Year Fixed Refi Rates
Right now, the average 30-year fixed refinance has an interest rate of 5.27%, a decrease of 41 basis points from a week ago.
You can use our mortgage calculator to price out your monthly mortgage payments and to understand how much you could save if you made extra payments. Our mortgage calculator will also show you how much interest you’ll be charged over the entire loan term.
15-Year Fixed Refi Rates
Right now, average 15-year fixed refinance rates are 4.57%, a decrease of 34 basis points from a week ago.
Monthly payments on a 15-year refinance loan can be a considerable amount more than what you’d get with a 30-year mortgage. However, a shorter loan term can help you build up equity in your home much more quickly.
Average 10-Year Fixed Refinance Rates
The average 10-year, fixed refinance rate is 4.51%, a decrease of 39 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 determine refinance rates
The table below shows how refinance rates have changed in the past week.
These daily refinance rates are provided by Bankrate. The information is based on customers that fit a certain profile, such as the home is an owner occupied single family residence. If your personal situation doesn’t meet or exceed the standards of this survey, then it’s likely you’ll end up with a refi rate higher than what’s listed..
Bankrate is owned by Red Ventures, Nextadvisor’s parent company.
|30-year mortgage refinance rate||5.27%||5.68%||-0.41|
|15-year fixed refinance rate||4.57%||4.91%||-0.34|
|10-year fixed refinance rate||4.51%||4.90%||-0.39|
Rates as of August 2, 2022.
Refinance Rate Frequently Asked Questions (FAQ):
Should I Refinance Right Now?
Refinancing isn’t solely dependent on the numbers, like the refinance rate, your situation is also a big factor. The simple question to ask yourself is: “Will refinancing help me achieve my financial goals?”
Generally speaking, refinancing makes sense if you can lower your interest rate by 1% or more. But sometimes the purpose of a refinance isn’t to reduce your mortgage rate. With home values rising, many homeowners are choosing to turn their new found equity into cash with a HELOC. The money you receive from a HELOC can be used for anything, but HELOCs usually have higher interest rates than other mortgage loans. So it’s important to have a plan before you decided to take on more debt.
If it makes sense for your situation, now is still a good time to refinance your mortgage.
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 healthier credit score generally will get you a better refinance rate.
But your personal financial situation isn’t the only thing that will impact your mortgage refinance rate. The amount of equity you have in the home also comes into play. Having at least 20% equity in your property is ideal.
Even the mortgage itself has an affect on your mortgage refinance rate. A loan with a shorter repayment term generally has better rates than loans with longer repayment terms, all else equal. Your mortgage refinance rate is also impacted by the type of refinance loan you plan on taking out. Cash-out refinance loans typically have higher interest rates than other loans.
What Is the Average Cost of Refinancing?
Refinancing a mortgage typically 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. So it’s important to shop around and compare offers. Everything from where the property is located to the type of loan you’re refinancing into can change what you’ll pay to refinance.
Current Mortgage Rates by Loan Type
Mortgage Refi Rates
Home Purchase Interest Rates
- 30 Year Fixed Mortgage Rates
- 20 Year Fixed Mortgage Rates
- 15 Year Fixed Mortgage Rates
- 10 Year Fixed Mortgage Rates