A few closely followed mortgage refinancing rates rose today.
Both 15-year and 30-year bonds saw average interest rates rise. At the same time, average rates for 10-year fixed refinancing also rose.
As refinance rates climb higher, homeowners should take a closer look at the numbers before plunging into a refinance. Adding to the pressure interest rates are under is the Federal Reserve’s recent decision to hike short-term interest rates again. The May hike was 50 basis points and more hikes are expected from the Fed this year.
For borrowers who have been able to refinance at near-record low interest rates over the past two years, there probably is no point in refinancing now. The refinancing rate you qualify for is determined by more than just market factors; Your creditworthiness and personal financial circumstances also play an important role. That means it might be worth getting at least an offer from a mortgage lender if you’ve recently had a significant improvement in your credit score.
When refinancing, you can not only negotiate the interest rate, but also the fees. It’s important to keep this in mind when choosing your mortgage lender.
Here’s where the prices might be and what you need to know about them.
Refinancing rates are currently:
Find out about the mortgage refinancing rates for your area here.
Refi Rate Forecast: What determines the development of mortgage interest rates?
This year we’ve seen a dramatic increase in mortgage rates, and some experts are forecasting another increase. One factor contributing to this is the US Federal Reserve’s raising of short-term interest rates and the cessation of its bond-buying program.
Inflation, which was 8.5% in March, the highest in 40 years, also pushed up refinancing rates. Russia’s war in Ukraine has only added to uncertainty and has the potential to keep inflation rates high.
Another factor that could affect rates is COVID-19. While the Omicron variant has faded across much of the United States, a resurgence of the virus could impact markets. That’s almost impossible to predict, and experts say it’s a possible source of more volatility.
Does refinancing still make sense?
An interest rate and term refinance can save you money in the long run, but typically you want the new interest rate to be at least 0.75% to 1% lower than your current interest rate. And the number of homeowners with rates well above current market rates has dwindled dramatically as interest rates have risen.
There are alternatives to refinancing. As values rise in today’s housing market, homeowners may want to turn that value into cash. If interest rates are where they are, a home equity line of credit (HELOC) can make sense for you because you don’t have to take out a new mortgage. A HELOC can be a reasonable option for financing home repairs or improvements, but make sure you understand the fine print regardless of fees, interest rate, and repayment schedule.
Why is it important to look at the history of 30-year fixed-rate mortgages?
Although today’s refinancing rates are near or above 5%, this is a typical interest rate in the past. It might be a good idea to refinance if your current interest rate is higher than today’s rates.
This chart using data from a Freddie Mac survey that differs slightly but is generally consistent with the Bankrate survey used by NextAdvisor. This chart provides a glimpse of how today’s prices compare to the past two decades. They’re up from historically low 2020 and 2021, but they’re still not absurdly high if you zoom out further.
Pro tip: Refinance closing costs
When you take out a new home loan, you pay upfront fees ranging from 3% to 6% of your loan amount. If you’re refinancing, it’s a significant expense to consider. Your monthly savings may not have exceeded the upfront payments if you refinance too often or sell your home soon after the refinance.
30 year refi sets
Right now, the average 30-year fixed refinance rate is 5.51%, up 9 basis points from a week ago.
You can use our mortgage calculator to find out how much your mortgage will cost you each month and how much interest savings you’ll be able to make back payments. Our mortgage calculator also shows you how much interest you will be charged over the entire term of the loan.
15 year fixed refinancing rates
Right now, the average 15-year fixed refinancing rate is 4.76%, up 7 basis points from the previous 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.
Average 10-year refinancing rates
The average 10-year fixed refinancing rate is 4.75%, up 10 basis points from what we saw last week.
Monthly payments with a 10-year refinancing term would cost even more than what you would pay for a 15-year loan. The benefit is that you would end up paying even less interest over the life of the loan.
How we calculate our refinancing rates
Our refinancing rates are based on daily rate data from Bankrate, owned by the same parent company as NextAdvisor. These average overnight refinance rates are based on a client profile as follows:
- Loan to Value (LTV) or 80% or less
- own home
- Credit score of 740+
- Detached house for one family
The information provided to Bankrate by lenders across the country is shown in the table below:
Prices from May 9, 2022.
Take a look at the mortgage refinance rates for a number of different loans.
Frequently asked questions (FAQ) about the refinancing rate:
Is now a good time to refinance?
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
Refinancing can be a good idea if you can lower your interest rate enough to offset the upfront closing costs. However, there are times when the primary reason for refinancing isn’t to secure a lower interest rate. Opening a home equity line of credit has become increasingly popular lately as homeowners decide to take advantage of rising home values. If you’re looking to open a home equity line of credit, you should have a plan for the money beforehand. HELOCs have higher interest rates than mortgages, and you increase your debt at the same time.
If it makes sense for your situation, now is still a good time to refinance your mortgage.
How to qualify for the best refi rate
Your finances have a large impact on the refinance rate you may qualify for. When you have more equity in your home and a healthier credit score, you usually get a better interest rate.
Your situation isn’t the only factor affecting your interest rate. The equity that you have in the property also plays a role. You want at least 20% equity or a loan-to-value ratio of 80% or less.
Even the mortgage itself affects your refinance rate. A shorter term refinance loan usually has better interest rates than mortgage refinance loans with longer repayment terms, all else being equal. When you want to turn your equity into cash with a cash-out refinance, you will be charged a higher interest rate compared to other types of refinance.
How much does the refinance cost?
There are a handful of things to consider that affect refinancing costs, including:
- Where the property is located
- type of mortgage
- your lender
- loan balance
- The equity you have in the house
Generally, the closing cost of refinancing is 3% to 6% of the loan balance. Your state and local regulations may affect what fees and taxes you pay. With more equity in the home and a higher credit score, it becomes easier to qualify for the refinance loan, secure a lower interest rate, and get lenders to compete for your business.
Mortgage rates by loan type
Mortgage refi rates
Interest rates on home loans