Several closely followed mortgage refinancing rates climbed today.
Average rates rose for both 15-year and 30-year bonds. The average interest rate on 10-year fixed refinance mortgages also rose.
A borrower should check the numbers carefully before taking out a new mortgage in the current interest rate environment. With rising refi rates, borrowing costs are higher than they were a year ago. However, interest rates aren’t the only thing to focus on. Closing costs for a refinance loan can add up to thousands of dollars and add significantly to your upfront costs.
Here are today’s refinancing rates.
Take a look at today’s refinancing rates:
Take a look at local refinancing rates.
Refi Rate Forecast: What determines the development of mortgage interest rates?
The annual inflation rate was 8.3% in April, according to data from the Bureau of Labor Statistics. The price is still at the level of the 40-year inflation highs of the last few months. And that means that as long as inflation stays high, refinancing rates are likely to keep rising.
With inflation lasting longer than expected, the Federal Reserve has started raising interest rates. Add to that Russia’s invasion of Ukraine and China’s COVID-19 lockdowns. Both of these geopolitical events threaten to exacerbate existing supply chain problems and fuel inflation. In the coming months, we could really see how these events affect us. “The pain of the lockdown in April and March has yet to be fully felt in manufacturing outside of China,” Lindsey Piegza, chief economist at Stifel Financial, told NextAdvisor.
All of this means we could be left with high inflation much longer than we would like, making it more likely that the Fed will have to hike rates aggressively.
Is refinancing a good idea now?
In general, homeowners could save thousands with an interest rate and term refinance if their new rate is 0.75% to 1% below their current rate. However, as interest rates have risen, the number of homeowners with interest rates well above current market rates has fallen dramatically.
In this hot real estate market, the ability to convert your home‘s equity into cash with a home equity line of credit (HELOC) is becoming increasingly popular. For those looking to consolidate high-interest debt or making much-needed home repairs or upgrades, a HELOC might make sense. If you go this route, you should understand the repayment schedule, interest rate, and fees as they may differ from a traditional mortgage.
Why is it important to look at the history of 30-year fixed-rate mortgages?
Current mortgage rates are still within normal historical range, even as they break through the psychological 5% barrier. However, refinancing is still a viable option if your existing interest rate is significantly higher than prevailing interest rates.
The historical price trends shown in this chart refer to data prepared by Freddie Mac. NextAdvisor typically uses rate information collected by Bankrate. While these mortgage rate surveys differ, they tend to show the same trends.
Pro tip: What you should know about refinancing fees
When you take out a new home loan, you pay upfront fees ranging from 3% to 6% of your loan amount. When refinancing, you must take this expense into account. If you refinance frequently or sell your home shortly after refinancing, you may not be making enough savings to justify the upfront fees.
30 year refi sets
Right now, the average 30-year fixed refinance rate is 5.58%, up 20 basis points from a week ago.
You can use our mortgage calculator to get an idea of your monthly payments and how much you could save if you made additional payments. Our mortgage calculator also shows you how much interest you will be charged over the entire term of the loan.
15-year refinancing rates
For 15-year fixed refinance, we see an average interest rate of 4.74%, up 12 basis points from what we saw last week.
The monthly payments on a 15-year refinance loan can be significantly higher than a 30-year mortgage. However, a shorter loan term can save you thousands of dollars in interest over the life of the loan.
10-year fixed refinancing rates
The average 10-year fixed refinancing rate is 4.66%, up 14 basis points from the rate observed last week.
Monthly payments with a 10-year refinancing term would cost a lot more per month than with a 15-year term, but you pay less interest over the long term.
How we determine refinancing rates
Our refinancing rates are based on daily rate data from Bankrate, owned by the same parent company as NextAdvisor. These average daily refinancing rates are based on a borrower profile that meets these criteria:
- At least 20%+ equity
- primary residence
- FICO score 740+
- Existing single-family house (no new construction)
The information provided to Bankrate by lenders across the country is shown in the table below:
Prices from June 10, 2022.
Take a look at the mortgage refinance rates for a number of different loans.
Frequently asked questions (FAQ) about the refinancing rate:
Should I refinance now?
The decision to refinance is not only determined by market factors such as interest rates or house values, your personal situation also plays a role. You should ask yourself if refinancing will help you achieve your goals
As a rule of thumb, refinancing makes sense if you can lower your interest rate by 1% or more. But sometimes the purpose of a refinance isn’t to lower your mortgage rate. With real estate values soaring, many homeowners are choosing to convert their newfound equity into cash with a HELOC. The money you get from a HELOC can be used for anything, but HELOCs typically have higher interest rates than other mortgage loans. Therefore, it’s important to have a plan in place before you decide to take on more debt.
Overall, now is still an excellent time to refinance, as long as it makes sense for your situation.
How to qualify for the lowest refi rate
Mortgage refinancing rates are affected by your personal finances. Healthier credit ratings and lower loan-to-value (LTV) ratios can usually secure lower refinancing rates.
But your personal financial situation isn’t the only consideration affecting your refinance rate. The value of your property compared to your loan balance also plays a role in the decision. You want at least 20% equity or a loan-to-value ratio of 80% or less.
Even the mortgage itself has an impact on what your interest rate will be. A shorter term refinance loan generally has better interest rates than loans with longer repayment terms, otherwise all are equal. Your mortgage refinance rate is also affected by the type of refinance loan you choose to take out. A cash-out refinance loan typically has an interest rate than other types of home loan refinance.
How much does a refinance cost?
When you refinance a mortgage, closing costs are typically between 3% and 6% of the loan amount. So, for a $300,000 loan, you can expect closing costs of between $9,000 and $18,000.
But every lender will assess your personal situation differently. It is therefore important to shop around and compare offers. Everything from where the property is located to the type of loan you refinance into can change what you pay for the refinance.
Mortgage interest rates by loan type
Mortgage refi rates
Interest rates for buying home loans