Current Refinance Rates, August 5, 2022 | Rates See Another Significant Dip

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Today, a few closely followed mortgage refinance rates went down.

Throughout the first months of 2022 refinance rates have been on a tear, increasing dramatically. The Federal Reserve has already increased short-term rates twice this year, with more raises to come.

A borrower should carefully review the numbers before taking out a new mortgage in the current interest rate environment. Simply put, the cost of refinancing is increasing because rates are higher. With that in mind, your refinance rate isn’t the only thing that matters. Refinance closing costs can average 3% to 6% of the loan balance and in the short run, could be more expensive than the interest you pay.

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:

Compare refinance rates for a wide range of different loans here.

Refinance Rate Trends

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 bad news for refinance rates.

As inflation lingers longer than anticipated, the Federal Reserve has begun raising interest rates. Adding to the issue is Russia’s invasion of Ukraine and China’s COVID-19 lockdowns. Both of these geopolitical events threaten to compound existing supply chain issues and add to inflation. In the months to come is when we could really start to see these events impact us. “The pain of the April and March lockdown is not yet fully being felt in the manufacturing sector outside of China,” Lindsey Piegza, chief economist at Stifel Financial told NextAdvisor.

Because of all of this, we could be stuck with high inflation for much longer than we want, which makes it more likely that the Fed will have to raise interest rates aggressively.

Is Now a Good Time to Refinance?

Generally speaking, homeowners could save thousands with a rate and term refinance if their new rate is 0.75% to 1% below their current rate. However, as rates have risen, the number of homeowners with rates well above current market rates has diminished dramatically.

In this hot housing market, the ability to turn the equity in your home into cash with a home equity line of credit (HELOC) has become increasingly popular. For those wanting to consolidate high-interest debt or make much needed home repairs or upgrades, a HELOC could make sense. If you go that route, you’ll want to understand the repayment schedule, interest rate and fees because they could differ from a traditional mortgage.

Pro Tip: Refinance Closing Costs

Fees associated with refinancing a mortgage are known as closing costs. Closing costs range from 3% to 6% of your loan amount, so they can add up quickly. A refinance may cut your monthly payment, just make sure that you plan on keeping the loan long enough for the ongoing savings to surpass the out-of-pocket costs.

30-Year Fixed Refinance Rates

Right now, the average 30-year fixed refinance has an interest rate of 5.40%, an increase of 2 basis points over the previous week.

You can use our mortgage calculator to get an idea of what your monthly payments will be and to understand how paying more each month will impact your mortgage. 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 4.66%, a decrease of 2 basis points over the previous week.

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.

10-Year Refinance Rates

The average 10-year, fixed refinance rate is 4.67%, an increase of 9 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 term.

How we determine refinance rates

Our daily refinance rates are based Bankrate’s daily rate data, which is owned by the same parent company as NextAdvisor. These daily refi interest rate averages are based on a consumer profile of the following:

  • 80% LTV or lower
  • Owner occupied home
  • FICO score 740+
  • Single-family detached home

The information provided to Bankrate from lenders nationwide is specified in the table below:

Average refinance interest rates
ProductRateLast weekChange
30-year mortgage refinance rate5.40%5.38%+0.02
15-year fixed refinance rate4.66%4.68%-0.02
10-year fixed refinance rate4.67%4.58%+0.09

Rates as of August 5, 2022.

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

Pro Tip

Enter your mortgage payment and other loan information into NextAdvisor’s mortgage refinance calculator to get a sneak peak at how refinancing could help you.

Refinance Rate Frequently Asked Questions (FAQ):

Is Now Still a Good Time to Refinance?

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?”

One rule of thumb is that refinancing makes sense if you can reduce your interest rate by 1% or more. There are times, however, when the main reason for refinancing isn’t to secure a lower interest rate. With home values rising, many homeowners are choosing to turn their new found equity into cash with a HELOC. A HELOC may not always get you the best rate, but it can be a smart way to consolidate debt or to affordably finance a home renovation.

Overall, now is still an excellent time to refinance as long as it make sense for your situation.

How to Qualify for the Lowest Refinance Rate

Your finances have a big effect on the refinance rate you get. Having a lower loan-to-value ratio for your home and a better credit score usually translates into a better interest rate.

Your situation isn’t the only thing that will impact your mortgage refinance rate. The amount of equity you have in the property also comes into play. Having at least 20% equity in your property is ideal.

The type of mortgage loan has an affect on what your mortgage refinance rate will be. A shorter-term refinance loan generally has better rates than a loan with longer terms. The type of refinance you need makes a difference in the refinance interest rate. Cash-out refinance loans typically have higher interest rates than other loans.

Average Cost of Refinancing

If you refinance your mortgage, closing costs typically 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 assessing your situation. Compare your options and shop around. Everything from where the home is located to what loan type you’re refinancing into could impact your upfront costs.

Mortgage Interest Rates by Loan Type

Mortgage Refi Rates

Home Purchase Interest Rates