Today, a number of benchmark mortgage refinance rates grew.
Both the 15-year fixed and 30-year fixed saw their mean rates climb. The average rate on 10-year fixed refinance mortgages also made gains.
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.
Given the current rate environment, it is prudent for borrowers to look hard at the numbers before taking out a new home loan. With refi rates on the rise, the cost of borrowing is higher than it was a year ago. That said, interest rates aren’t the only thing to concentrate on. The fees you pay to close a home loan matter, and can add up to thousands of dollars.
Let’s take a look at where refi rates are and what it means for you.
The average mortgage refinance rates are as follows:
Refinance Rate Forecast: What Is Driving Mortgage Rate Change?
The Consumer Price Index (CPI) for September shows inflation is still high at 8.2%And that’s bad news for refinance rates.
To fight high inflation the Federal Reserve has been raising short-term interest ratesAll of this means that we could be stuck with high inflation for longer than we’d like, which increases the likelihood that the Fed will need to be more aggressive in raising rates.
Is Refinancing Now a Good Idea?
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. 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. In some situations, a HELOC can make sense, especially when consolidating debt or remodeling your home.
Pro Tip: Refinance Closing Costs
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. 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 6.68%, an increase of 8 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 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 Refinance Rates
Right now, average 15-year fixed refinance rates are 6.16%, an increase of 13 basis points from what we saw last week.
Monthly payments on a 15-year refinance loan are tougher to fit into a monthly budget than a 30-year mortgage payment would be. However, a shorter loan term can save you thousands of dollars interest over the life of the loan.
Average 10-Year Refinance Rates
The average 10-year, fixed refinance rate is 6.30%, an increase of 17 basis points from a week ago.
Monthly payments with a 10-year refinance term would cost a massive amount more per month than you would with a 15-year term, but you’ll pay less interest in the long term.
How we calculate our refinance rates
The table below shows refinance rates trends from the past week.
These refi rates are supplied by Bankrate. The information is based on homeowners that fit a certain profile, such as a credit score of 740+ with a loan-to-value ratio of 80% or better. So you may qualify for different rates if your personal circumstances don’t align with the survey criteria.
Bankrate is owned by Red Ventures, Nextadvisor’s parent company.
Rates as of December 30, 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. 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.
However, your interest rate isn’t the only factor to consider when determining if now is the right time for you 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. 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. If you opt for a shorter-term refinance, the trade off is that your monthly payment will be higher than with a longer loan.
Be sure you take all factors into consideration before refinancing, not just the interest rate.
How to Ensure You Get the Best Refinance 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 ordinarily will get you a better interest rate.
Your situation isn’t the only thing that will impact your interest 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 will impact your mortgage refinance rate. A shorter-term refinance loan usually has lower refinance rates than a loan with longer terms. Also, if you want to turn your equity into cash with a cash-out refinance, you should expect to pay a higher mortgage rate for that privilege.
How Much Does It Cost to Refinance?
There are a number of factors that influence the cost of refinancing, including:
- Where the property is located
- Type of the mortgage
- Your lender
- Loan amount
- Credit score
- Home’s equity
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.
Current Mortgage Rates by Loan Type
Mortgage Refi Rates
Home Purchase Interest Rates