Today, several benchmark mortgage refinance rates saw growth.
Both the 15-year fixed and 30-year fixed saw their average rates go up. The average rate on 10-year fixed refinance mortgages also saw growth.
Refinance rates have skyrocketed through the first months of 2022. We’ve already seen multiple increases in short-term interest rates and the Fed has plans for more to come.
A borrower should carefully review the numbers before taking out a new mortgage in the current interest rate environment. Right now, homeowners may struggle to find an interest rate low enough for refinancing to make sense. Keep in mind, when deciding to refinance there are other factors outside of just the rate to consider. 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.
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:
- 30-year mortgage refinance rate: 6.42%
- 15-year mortgage refinance rate: 5.66%
- 10-year mortgage refinance rate: 5.77%
Refinance Rate Trends
In July, annual inflation was 8.5% based on the Consumer Price Index (CPI). And that’s bad news for refinance rates.
With high inflation lingering longer than initially expected the Federal Reserve has raised interest rates three times. 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.
Should You Consider a 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. That said, the recent spike in refinance rates has drastically reduced the number of homeowners with interest rates that are 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 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: What to Know About Refinance Fees
When you take out a new home loan, you’ll pay upfront fees totaling 3% to 6% of the loan amount. When refinancing, you need to consider this expense. If you refinance too frequently or sell your home shortly after refinancing, your monthly savings may not have exceeded the upfront fees.
30-Year Refi Rates
Right now, the average 30-year fixed refinance has an interest rate of 6.42%, an increase of 23 basis points from what we saw last week.
You can use our mortgage calculator to price out your monthly mortgage payments 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 Refi Rates
Right now, average 15-year fixed refinance rates are 5.66%, an increase of 12 basis points from what we saw last 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 Fixed Refinance Rates
The average 10-year, fixed refinance rate is 5.77%, an increase of 16 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 refi rates
Our refinance rate trends are based Bankrate’s daily rate data, which is owned by the same parent company as NextAdvisor. These daily refinance rate averages are based on a customer profile of the following:
- Loan to value (LTV) or 80% or less
- Principal residence
- FICO score 740+
- Single-family detached home
The information supplied to Bankrate from lenders across the nation is displayed in the table below:
|30-year mortgage refinance rate||6.42%||6.19%||+0.23|
|15-year fixed refinance rate||5.66%||5.54%||+0.12|
|10-year fixed refinance rate||5.77%||5.61%||+0.16|
Rates as of September 22, 2022.
Refinance Rate Frequently Asked Questions (FAQ):
Should I Refinance Right Now?
Refinance rates are still quite low even though they are up from the recent record lows. If you want to reduce your mortgage payment by refinancing to a lower rate, and you haven’t refinanced in the past few years, then now is still a good time to look into refinancing.
When deciding whether to refinance, interest rates are not the only factor to consider. Refinancing into a new home loan can add years onto your mortgage. If you’re close to paying off your existing mortgage, then you’ll want to factor in the trade offs. If you’ve been paying on your current mortgage for 10 years, then you may want to refinance with a 20 years loan so that you aren’t adding years to the backend of your loan. Keep in mind, your monthly payment will be higher with a shorter-term refinance than with a longer-term loan.
There is more than just the interest rate that goes into the decision to refinance, so be sure you’re taking everything into consideration.
How to Qualify for the Best Refinance Rate
Your finances have a big effect on the refinance rate you’ll be able to secure. Having a lower loan-to-value ratio for your home and a better credit score usually translates into a lower refinance rate.
Your situation isn’t the only factor that impacts your refinance interest rate. Your property’s equity also factors into the decision. Having at least 20% equity in your property is ideal.
The type of mortgage loan will impact your refinance rate. A loan with a shorter repayment term typically has lower refinance rates than a longer-term loan. The type of refinance loan you need makes a difference in the interest rate. A cash-out refinance loan typically has a higher refinance interest rate than other types of refinance loans.
How Much Does Refinancing Cost?
When you refinance a mortgage the closing cost typically range from 3% to 6% of the loan amount. So for a $300,000 loan, you can expect to pay $9,000 to $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.
Mortgage Rates by Loan Type
Mortgage Refinance Rates
Home Loan Rates
- 30 Year Fixed Mortgage Rates
- 20 Year Fixed Mortgage Rates
- 15 Year Fixed Mortgage Rates
- 10 Year Fixed Mortgage Rates