Today, several closely followed mortgage refinance rates moved up.
Both the 15-year fixed and 30-year fixed saw their mean rates trend upward. At the same time, average rates for 10-year fixed refinances also moved up.
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.
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. That said, interest rates aren’t the only thing to concentrate on. Closing costs on a refinance loan can add up to thousands of dollars, greatly increasing your upfront costs.
Let’s take a look at the current refi rate trends.
Take a look at today’s refinance rates:
- The average 30-year fixed-rate refinance is 6.55%
- Currently, the average 15-year fixed-rate refinance is 5.75%
- 10-year mortgage refinance rate: 5.92%
Refinance Rate Forecast: What Drives Changes in Mortgage Rates?
The annual inflation rate came in it at 8.5% in July, according to the latest data from the Bureau of Labor StatisticsAnd that’s not good 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.
Is It a Good Time to Refinance Right Now?
As a rule of thumb, refinancing can save you money if you can secure an interest rate that’s around 1% lower than your existing 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. 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: 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. If you refinance, this is a significant expense you should take into account. Your monthly savings may not have exceeded the upfront fees if you refinance too often or sell your home soon after refinancing.
Average 30-Year Fixed Refinance Rates
Right now, the average 30-year fixed refinance has an interest rate of 6.55%, an increase of 27 basis points from a week ago.
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 Refi Rates
For 15-year fixed refinances we’re seeing an average rate of 5.75%, an increase of 16 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 save you thousands of dollars interest over the life of the loan.
10-Year Refi Rates
The average 10-year, fixed refinance rate is 5.92%, an increase of 18 basis points from a week ago.
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 our refinance rates are calculated
Our daily refinance rates are based Bankrate’s daily rate data, which is owned by the same parent company as NextAdvisor. These overnight refinance interest rate averages are based on a consumer profile that meets these qualifications:
- At least 20%+ equity
- Owner occupied home
- FICO score of 740 or higher
- Existing single-family detached home (not new construction)
The information provided to Bankrate from lenders across the country is provided in the table below:
|30-year mortgage refinance rate||6.55%||6.28%||+0.27|
|15-year fixed refinance rate||5.75%||5.59%||+0.16|
|10-year fixed refinance rate||5.92%||5.74%||+0.18|
Rates as of September 23, 2022.
Refinance Rate Frequently Asked Questions (FAQ):
Is It Still a Good Time to Refinance?
Even though refinance rates are higher than the recent record lows, they are still historically favorable. 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.
You should also consider other factors when deciding whether it is the right time for you to refinance. 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. Depending on how long you’ve had your current mortgage, you may not want a 30-year refinance loan. However, you will pay more each month if you choose a shorter-term refinance, although depending on how much you can reduce your interest rate it may balance out.
Be sure you take all factors into consideration before refinancing, not just the interest rate.
How to Qualify for the Best 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 higher credit score generally translates into a lower mortgage refinance rate.
But your personal financial situation isn’t the only consideration that affects the refinance rate you qualify for. The equity you have in the property also comes into play. Having at least 20% equity in your property is ideal.
Even the mortgage itself has an affect on your refinance interest rate. A loan with a shorter repayment term usually has lower interest rates than mortgage refinance loans with longer repayment terms, all else equal. Your refinance interest rate is also affected by the type of mortgage refinance you plan on taking out. Cash-out mortgage refinance loans typically have higher refinance interest rates than other loans.
How Much Does Refinancing Cost?
There are a number of factors that influence the cost of refinancing, including:
- Where you live
- Type of refinance loan
- What lender you choose
- Loan balance
- Credit score
- Home’s equity
In general, refinance closing costs are 3% to 6% of the loan balance. The type of the loan you are refinancing into can impact its cost in a few different ways. Certain government-backed refinance loans, like the FHA Streamline or VA Interest Rate Reduction Refinance Loan (IRRRL) may not require an appraisal, but could come with hefty upfront fees to cover the mortgage insurance. On the other hand, if you have enough equity, you could refinance into a conventional loan to possibly get rid of the mortgage insurance requirement.
Mortgage Interest Rates by Loan Type
Mortgage Refinance 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