Today, a few closely watched mortgage refinance rates moved higher.
Both the 15-year fixed and the 30-year fixed saw their average rate increase. And average 10-year fixed refinance rates have also increased.
In 2022, mortgage refinance rates have nearly reached levels not seen since before the pandemic, after nearly two years of record high rates.
Refinancing your home doesn’t have to be put on hold. Although rates are higher than they were in 2021, 30-year fixed rates are still much lower than they were just a few years ago.
The number of homeowners eligible to save with a refinance has dropped since rates have gone up. But experts say that for refinancing to make sense, it entirely depends on your personal financial situation. A good rule to follow is this: if you can refinance at a rate that is at least 0.75% lower than your current rate, it makes sense. “If you can lower your rate no matter what’s happening in the market, it will save you money,” says Jennifer Beeston, senior vice president of guaranteed rate mortgages.
Let’s take a look at where refi rates are today, historical rates, and break down what it all means.
Refinance rates are currently:
Take a look at local refinance rates.
Refinance Rate Forecast: What’s Driving the Mortgage Rate Change?
Mortgage rates have risen significantly since the start of 2022. Two factors driving rates up are the post-pandemic recovery and record inflation. In response to high inflation, the Federal Reserve will likely raise short-term interest rates.
Financial markets are feeling the effects of Russia’s war in Ukraine. Stock prices fell and gasoline prices rose. As a result, the market has become more uncertain and volatile. The resurgence of COVID-19 variants is another concern. Overall, cases of Omicron have declined in the United States, but its future cannot be predicted with certainty.
Inflation was also one of the causes of higher refi rates in January and February, exceeding 7% in both months. High inflation will cause the Fed to act throughout the year, and it could act more aggressively if inflation remains high. These moves can drive up rates by increasing borrowing costs for lenders.
Throughout 2022, mortgage rates are expected to rise according to most experts. However, there will be a lot of short-term volatility.
Is it a good time to refinance now?
There has been a significant increase in refinance rates, but overall borrowers can still access rates near historical lows. Now is a good time to refinance if you haven’t done so in the past few years. Generally speaking, homeowners could save thousands of dollars with a rate and term refinance if their new rate is 0.75% to 1% lower than their current rate.
In this hot housing market, the ability to turn your home equity into cash with a home equity line of credit (HELOC) has become increasingly popular. In some situations, a HELOC can make sense, especially when consolidating debt or renovating your home.
Moreover, a refinancing decision is not limited to a simple interest rate. The decision to refinance a home should be strategic in what you intend to get out of it. A rate and term refinance could help you lower your monthly mortgage payment. But a cash refinance could help consolidate debt or fund a home improvement project.
Why is it important to look at the 30-year fixed mortgage rate history?
Rates were well above 4% as recently as 2018 and 2019. Before the crash of 2008, a “good” rate was still above 5%. Current mortgage interest rates are still very good in the long term, even if they cross the psychological barrier of 4%. If your current rate is higher than current rates, a refinance might be a good option.
This chart, which uses data from a Freddie Mac survey that differs slightly but generally follows the Bankrate survey used by NextAdvisor. This graph provides an overview of how today’s rates compare to those of the past two decades. They’re up from the historically low years of 2020 and 2021, but they’re still not high if you zoom out more than a few years.
Pro tip: What you need to know about refinancing fees
Closing costs are the fees you pay when you refinance a mortgage. Closing costs for a loan can range from 3% to 6% of the loan amount, making it a costly expense. Your monthly payment may drop with a refinance, but be sure to keep the loan long enough for the ongoing savings to outweigh the out-of-pocket costs.
Average refinancing rate over 30 years
Right now, the average 30-year fixed refinance has an interest rate of 5.07%, up 1 basis point from what we saw last week.
You can use our mortgage calculator to get an idea of what your monthly payments will be and to understand how much you could save if you made additional payments. Our Mortgage Calculator will also tell you how much interest you will be charged over the life of the loan.
15-year fixed refi rates
Currently, the average rate on a 15-year fixed refinance loan is 4.35%, an increase of 12 basis points from a week ago.
Monthly payments on a 15-year refinance loan can be significantly higher than what you would get on a 30-year mortgage. However, a shorter loan term can save you thousands of dollars in interest over the life of the loan.
Average refinancing rate over 10 years
The average 10-year fixed refinance rate is 4.45%, an increase of 20 basis points from what we saw last week.
Monthly payments with a 10-year refinance term would cost even more than what you would pay on a 15-year loan. The upside is that you’ll end up paying even less interest over the life of the loan.
How our refinance rates are calculated
The chart below shows how refinance rates have changed over the past week.
These refi rates are provided by Bankrate. The information is based on customers who fit a certain profile, such as a 740+ credit score with a loan-to-value ratio of 80% or higher. If your personal situation does not meet or exceed the guidelines of this survey, you are likely to end up with a higher refi rate than indicated.
Bankrate is owned by Red Ventures, the parent company of Nextadvisor.
Rates as of April 15, 2022.
Take a look at mortgage refinance rates for a number of different loans.
Frequently asked questions (FAQ) about the refinance rate:
Should I refinance now?
It’s not just about interest rates or home values when it comes to refinancing, your personal circumstances also play an important role. The simple question to ask yourself is, “Will refinancing help me achieve my financial goals?”
Refinancing can be a good idea if you can lower your interest rate enough to offset the initial closing costs. But sometimes the purpose of a refinance isn’t to lower your mortgage rate. Opening a home equity line of credit has recently grown in popularity as homeowners decide to capitalize on rising home values. If you’re considering opening a home equity line of credit, you’ll want to have a plan for the money up front. HELOCs have higher interest rates than mortgages and you will increase what you owe at the same time.
All in all, it’s still a great time to refinance as long as it makes sense for your situation.
How to make sure you get the lowest refinance rate
Mortgage refinance rates are influenced by your personal finances. If you have a higher credit score and better loan-to-value (LTV) ratios, you will usually be able to get lower refinance rates.
Your situation is not the only factor that influences the refinance rates offered to you. A better loan-to-value (LTV) ratio can help you qualify for a lower refinance rate. So the more equity you have accumulated, the better. Having at least 20% equity in your property is ideal.
Even the mortgage itself will have an impact on your interest rate. A shorter-term refinance loan generally has better refinance rates than loans with longer repayment terms, all other things being equal. The type of refinance you need makes a difference in the mortgage refinance rate. Mortgage refinance loans with withdrawal generally have higher interest rates than other loans.
Average cost of refinancing
Refinancing a mortgage usually involves paying closing costs of 3% to 6% of the loan amount. For example, if you have a $300,000 mortgage, you can expect to pay between $9,000 and $18,000 in closing costs.
But, each lender will assess your personal situation differently. It is therefore important to shop around and compare offers. Everything from the location of the property to the type of loan you are refinancing can change what you will pay to refinance.