Today, multiple benchmark mortgage refinance rates moved up.
Both the 15-year fixed and 30-year fixed saw their average rates rise. The average rate on 10-year fixed refinance mortgages also saw growth.
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. 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. The fees you pay to close a home loan matter, and can add up to thousands of dollars.
Here’s where refinance rates are today .
Take a look at today’s refinance rates:
Take a look at local refinance rates.
Refinance Rate Forecast: What Drives Changes in Mortgage Rates?
In April, annual inflation was 8.3% based on the Consumer Price Index (CPI). This still puts it on par with the 40-year highs we’ve seen in the past few months. And that means refi rates are likely to see more increases as long as inflation remains high.
In response to high inflation that has lasted longer than initially anticipated, the Federal Reserve has begun increasing interest rates. There are also geopolitical events that are poised to add to our inflation woes. China’s COVID lockdowns and the war in Ukraine could both exacerbate existing supply shortages. And the impact these events have on inflation may not be felt right away. “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.
If we end up with high inflation for an extended period of time, then the chances that the Federal Reserve dramatically increases rates goes up.
Is It a Good Time to 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.
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.
Why Is It Important to Look at the History of the 30-Year Fixed Mortgage Rate?
Although today’s refinance rates are near or above 5%, that is a typical interest rate historically. If your current rate is higher than today’s rates, then a refinance could be a good option.
This chart, which uses data from a survey by Freddie Mac that differs slightly but generally tracks with the Bankrate survey used by NextAdvisor. This graph offers a glimpse at how today’s rates compare with the past two decades. They’re up from the historically low years of 2020 and 2021, but they still aren’t absurdly high if you zoom out further.
Pro Tip: Pay Attention to Refinance Fees
For a new mortgage, you will have to pay upfront fees totaling 3% to 6% of the loan amount. If you refinance, this is a significant expense you should take into account. If you refinance too frequently or sell your home shortly after refinancing, your monthly savings may not have exceeded the upfront fees.
30-Year Fixed Refi Rates
Right now, the average 30-year fixed refinance has an interest rate of 5.38%, an increase of 16 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
Right now, average 15-year fixed refinance rates are 4.62%, an increase of 9 basis points over the previous 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 Refi Rates
The average 10-year, fixed refinance rate is 4.52%, an increase of 11 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 we determine refi rates
The table below shows refinance rates trends from the past week.
These daily refi rates are collected by Bankrate. The information is based on customers that fit a certain profile, such as the home is an owner occupied single family residence. If your personal situation doesn’t meet or exceed the guidelines of this survey, then it’s likely you’ll end up with a refi rate higher than what’s listed..
Bankrate is owned by Red Ventures, Nextadvisor’s parent company.
Rates as of June 3, 2022.
Take a look at mortgage refinance rates for a number of different loans.
Refinance Rate Frequently Asked Questions (FAQ):
Is Now Still a Good Time to Refinance?
It’s not just about interest rates or home values when it comes to refinancing, your personal circumstances also play a significant role. The simple question to ask yourself is: “Will refinancing help me achieve my financial goals?”
Generally speaking, refinancing makes sense if you can lower your interest rate by 1% or more. But sometimes the purpose of a refinance isn’t to reduce your mortgage rate. With home values rising, many homeowners are choosing to turn their new found equity into cash with a HELOC. The money you receive from a HELOC can be used for anything, but HELOCs usually have higher interest rates than other mortgage loans. So it’s important to have a plan before you decided to take on more debt.
At the end of the day, it’s a good time to refinance if refinancing aligns with your financial goals and helps you achieve them.
How to Ensure You Get the Lowest Refi Rate
Your financial situation has a big effect on the refinance rate you get. Having a lower loan-to-value ratio for your home and a higher credit score typically will get you a better refinance rate.
Your personal finances aren’t the only consideration that affects the interest rate you qualify for. A lower loan-to-value ratio (LTV) will help you secure a reduced refinance rate. So the more equity you’ve built up, the better. Having at least 20% equity in your property is ideal.
The type of mortgage loan has an affect on what your refinance rate will be. A loan with a shorter repayment term usually has better refinance rates than a loan with longer terms. Also, if you want to turn your equity into cash with a cash-out refinance, you’ll be charged a higher interest rate, compared to other types of refinancing.
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 refinance loan
- Your lender
- Loan amount
- FICO score
- The equity you have in the home
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 Loan Interest Rates