Both 15-year fixed and 30-year fixed refinances saw their average rates decline this week, with the latter dipping back below 7%. The average rate on 10-year fixed refinance also went down.
Like mortgage rates, refinance rates fluctuate on a daily basis and vary from lender to lender, but also rise and fall over the long term based on broader market conditions and macroeconomic factors. Refinance rates spiked in 2022 as the Federal Reserve hiked the federal funds rate in an attempt to tamp down inflation, but we're seeing signs that rates may be slowly starting to level out.
The 0.25% rate hike announced on Feb. 1 after the latest Fed meeting is the smallest one since March 2022, a sign that the Fed might be easing up on its aggressive rate hikes as inflation comes down. Looking at average mortgage rate data for the past year, mortgage rates hit a peak in late 2022 and have been trending down since then. We're still a long way from the record-low refinance rates of 2020 and 2021, but borrowers may see rates fall in 2023.
"With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably," says Greg McBride, CFA and chief financial analyst at Bankrate. (Bankrate, like CNET Money, is owned by Red Ventures.) He expects 30-year fixed mortgage rates to end the year near 5.25%.
Regardless of where rates are headed, homeowners shouldn't focus on timing the market, and should instead decide if refinancing makes sense for their financial situation. As long as you can get a lower interest rate than your current rate, refinancing will likely save you money. Do the math to see if it makes sense for your current finances and goals. If you do decide to refinance, make sure you compare rates, fees, and the annual percentage rate -- which shows the total cost of borrowing -- from different lenders to find the best deal.
30-year fixed-rate refinance
The current average interest rate for a 30-year refinance is 6.97%, a decrease of 12 basis points from what we saw one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 10- or 15-year refinance. This makes 30-year refinances good for people who are having difficulties making their monthly payments or simply want a bit more breathing room. Be aware, though, that interest rates will typically be higher compared to a 10- or 15-year refinance, and you'll pay off your loan at a slower rate.
15-year fixed-rate refinance
The average 15-year fixed refinance rate right now is 6.28%, a decrease of 10 basis points from what we saw the previous week. Refinancing to a 15-year fixed loan from a 30-year fixed loan will likely raise your monthly payment. However, you'll also be able to pay off your loan quicker, saving you money over the life of the loan. You'll also typically get lower interest rates compared to a 30-year loan. This can help you save even more in the long run.
10-year fixed-rate refinance
The current average interest rate for a 10-year refinance is 6.32%, a decrease of 4 basis points compared to one week ago. You'll pay more every month with a 10-year fixed refinance compared to a 15- or 30-year refinance -- but you'll also have a lower interest rate. A 10-year refinance can be a good deal, since paying off your house sooner will help you save on interest in the long run. Just be sure to carefully consider your budget and current financial situation to make sure that you can afford a higher monthly payment.
Where rates are headed
At the start of the pandemic, refinance interest rates hit a historic low. But in early 2022, the Fed started hiking interest rates in an effort to curb runaway inflation. While the Fed doesn't directly set mortgage rates, the Fed rate hikes led to an increased cost of borrowing among most consumer loan products, including mortgages and refinances. Mortgage rates hit a 20-year high in late 2022.
Recent data shows that overall inflation has been falling slowly but steadily since it peaked in June 2022, but it still remains well above the Fed's 2% inflation goal. After raising rates by 25 basis points in February, the Fed has indicated (PDF) it plans to slow -- but not stop -- the pace of its rate hikes throughout 2023. Both of these factors are likely to contribute to a gradual pull-back of mortgage and refinance rates this year, although consumers shouldn't expect a sharp drop or a return to pandemic-era lows.
We track refinance rate trends using information collected by Bankrate, which is owned by CNET's parent company. Here's a table with the average refinance rates reported by lenders across the country:
Average refinance interest rates
|Product||Rate||A week ago||Change|
|30-year fixed refi||6.97%||7.09%||-0.12|
|15-year fixed refi||6.28%||6.38%||-0.10|
|10-year fixed refi||6.32%||6.36%||-0.04|
Rates as of March 17, 2023.
How to find personalized refinance rates
It's important to understand that the rates advertised online often require specific conditions for eligibility. Your interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application.
Having a high credit score, a low credit utilization ratio and a history of consistent and on-time payments will generally help you get the best interest rates. You can get a good feel for average interest rates online, but make sure to speak with a mortgage professional in order to see the specific rates you qualify for. To get the best refinance rates, you'll first want to make your application as strong as possible. The best way to improve your credit ratings is to get your finances in order, use credit responsibly and monitor your credit regularly. Don't forget to speak with multiple lenders and shop around.
Refinancing can be a great move if you get a good rate or can pay off your loan sooner -- but consider carefully whether it's the right choice for you at the moment.
When to consider a mortgage refinance
Generally, it's a good idea to refinance if you can get a lower interest rate than your current interest rate, or if you need to change your loan term. When deciding whether to refinance, be sure to take into account other factors besides market interest rates, including how long you plan to stay in your current home, the length of your loan term and the amount of your monthly payment. And don't forget about fees and closing costs, which can add up.
As interest rates increased throughout 2022, the pool of refinancing applicants contracted. If you bought your house when interest rates were lower than they are today, there may not be a financial benefit in refinancing your mortgage.