Average rates for both 15-year and 30-year fixed refinances rose this week. The average rate for a 10-year fixed refinance also increased.
At the beginning of the pandemic, refinance rates were at historic lows around 3%. Homeowners who refinanced benefit from lower monthly payments, saving money in the process.
Then, in early 2022, the Federal Reserve stepped in to reduce inflation by increasing the federal funds rate, the key short-term interest rate. The Fed does not directly set mortgage rates, but a higher federal funds rate would have a ripple effect on all forms of borrowing, including mortgages and refinancings.
Refinance rates started to rise above 7% this year and are already at 8%. As a result, applications to refinance a mortgage have decreased. If you bought a home more than a year ago, you probably won’t be able to refinance a mortgage with a lower rate.
Landlords cannot time the market. Regardless of where rates go, you must decide whether refinancing makes sense based on your financial situation and goals. If your main goal is to save money, now is probably not the best time to refinance. But it may make sense for other reasons, including changing your mortgage type or removing someone from your mortgage. If you decide to refinance, be sure to compare rates, fees, and annual percentage rates. As long as you can get a lower interest rate than your current interest rate, refinancing can save you money. If you decide to refinance, be sure to compare different lenders’ rates, fees, and annual percentage rate that reflects the total cost of borrowing to find the best deal.
30-year fixed-rate refinancing
The current average interest rate for a 30-year refinance is 8.17%, up 6 basis points from a week ago. (A basis point is equivalent to 0.01%.) Refinancing from a shorter loan term to a 30-year fixed loan can lower your monthly payments. So if you’re having trouble making your monthly payments, a 30-year refinancing might be a good idea. In exchange for lower monthly payments, 30-year refinance rates will generally be higher than 10- or 15-year refinance rates. You’ll also pay off your loan more slowly.
15-year fixed-rate refinancing
The current average interest rate for a 15-year refinance is 7.32%, up 4 basis points from a week ago. A 15-year fixed refinance will likely increase your monthly payment compared to a 30-year loan. But over time, you’ll save more because you’re paying off your loan faster. 15-year refinance rates are generally lower than 30-year refinance rates; This helps you save even more in the long run.
10-year fixed-rate refinancing
Currently the average 10-year fixed refinance rate is 7.34%, an increase of 13 basis points from what we saw the previous week. A 10-year refinance will typically have the highest monthly payment but lowest interest rate of all refinance terms. A 10-year refinance can be a good deal because paying off your house sooner will help you save money on interest in the long run. Be sure to carefully evaluate your budget and current financial situation to make sure you can afford a higher monthly payment.
Where are the rates going?
Mortgage rates move up and down daily in response to a variety of economic factors, including inflation, the Fed’s policy changes, and the outlook for the economy more broadly.
The Fed adjourned the September 20 Federal Open Market meeting after nearly 11 consecutive interest rate hikes. However, with the Fed not considering a rate cut until 2024 at the earliest, experts say mortgage rates are likely to remain high for now. If inflation continues to decline and the Fed can keep interest rates steady, mortgage refinance rates will eventually stabilize. It takes months for the cumulative effects of the Fed’s policy decisions to be reflected in the economy.
We track refinance rate trends using information collected by Bankrate. Here’s a table showing average refinance rates offered by lenders across the US:
Average refinance interest rates
| Product | kidnapped | A week ago | Changing |
|---|---|---|---|
| 30 year fixed refi | 8.17% | 8.11% | +0.06 |
| 15 year fixed refi | 7.32% | 7.28% | +0.04 |
| 10 year fixed refi | 7.34% | 7.21% | +0.13 |
Prices as of October 25, 2023.
How to find the best refinancing rate?
It is important to understand that prices advertised online often require certain conditions for eligibility. Your interest rate will be affected by market conditions, as well as your specific credit history, financial profile and application.
Having a high credit score, low credit utilization rate, and a history of consistent and on-time payments will often help you get the best interest rates. You can get a good idea of average interest rates online, but be sure to talk to a mortgage professional to see the specific rates you qualify for. To get the best refinancing rates, you’ll first want to make your application as strong as possible. The best way to improve your credit score is to get your finances in order, use credit responsibly, and monitor your credit regularly. Be sure to talk to and shop around with multiple lenders.
If you get a good rate or can pay off your loan sooner, refinancing can be a great move; but carefully consider whether this is the right choice for you right now.
Is now a good time to refinance?
For refinancing to make sense, you’ll generally want to get a lower interest rate than your current rate. Besides interest rates, changing your loan term is another reason to refinance. When deciding whether to refinance, be sure to consider market interest rates as well as other factors, including how long you plan to stay in your current home, the length of your loan term, and the amount of your monthly payment. Also keep in mind any fees and closing costs that may be added.
As interest rates rise throughout 2022, the pool of refinancing applicants narrows. If you purchased your home when interest rates were lower than they are today, there may be no financial benefit to refinancing your mortgage.
