Several benchmark mortgage refinance rates climbed today. Both 15-year fixed and 30-year fixed refinances saw their mean rates increase. The average rate on 10-year fixed refinance also saw growth.
Refinance rates have been consistently rising since the beginning of 2022, and homeowners can expect to see rates continue to go up over the course of this year. In response to inflation, which is at a 40-year high, the Federal Reserve has hiked interest rates three times already, and plans to raise them throughout the rest of 2022. The Fed's moves indirectly influence the rates that homeowners will pay when refinancing a home. That means if you're looking to shave dollars and interest off your current monthly mortgage payments, these could be the lowest rates you'll see for a while. Make sure to think about your goals and circumstances, and compare rates and fees to find a mortgage lender who can meet your needs.
30-year fixed-rate refinance
The current average interest rate for a 30-year refinance is 5.97%, an increase of 8 basis points over this time last week. (A basis point is equivalent to 0.01%.) One reason to refinance to a 30-year fixed loan from a shorter loan term is to lower your monthly payment. Because of this, a 30-year refinance can be a good idea if you're having trouble making your monthly payments. However, interest rates for a 30-year refinance will typically be higher than rates for a 15-year or 10-year refinance. It'll also take you longer to pay off your loan.
15-year fixed-rate refinance
For 15-year fixed refinances, the average rate is currently at 5.26%, an increase of 21 basis points compared to one week ago. Refinancing to a 15-year fixed loan from a 30-year fixed loan will likely raise your monthly payment. On the other hand, you'll save money on interest, since you'll pay off the loan sooner. Interest rates for a 15-year refinance also tend to be lower than that of a 30-year refinance, so you'll save even more in the long run.
10-year fixed-rate refinance
The current average interest rate for a 10-year refinance is 5.40%, an increase of 35 basis points compared to one week ago. A 10-year refinance will typically feature the highest monthly payment of all refinance terms, but the lowest interest rate. A 10-year refinance can help you pay off your house much quicker and save on interest. 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 rates dropped to historic lows, but they have been steadily climbing since the beginning of this year. Refinance rates are rising due to inflation, which is at its highest level in four decades, as well as actions taken by the Federal Reserve. The Fed recently raised interest rates by 0.75 percentage points -- the highest increase in almost three decades -- and plans to raise them several more times throughout 2022 to slow the economy. That means it's a good idea to take advantage of refinancing now and lock in a decent rate before they continue going up.
We track refinance rate trends using data collected by Bankrate, which is owned by CNET's parent company. Here's a table with the average refinance rates provided by lenders across the US:
Average refinance interest rates
|30-year fixed refi||5.97%||5.89%||+0.08|
|15-year fixed refi||5.26%||5.05%||+0.21|
|10-year fixed refi||5.40%||5.05%||+0.35|
Rates as of June 21, 2022.
How to shop for refinance rates
It's important to understand that the rates advertised online may not apply to you. Your interest rate will be influenced by market conditions as well as your credit history and application.
Having a high credit score, 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 to find the best rate.
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 should I refinance?
In order for a refinance to make sense, you'll generally want to get a lower interest rate than your current rate. Aside from interest rates, changing your loan term is another reason to refinance. 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 have steadily increased since the beginning of the year, the pool of people eligible for refinancing has shrunk significantly. If you bought your house when interest rates were lower than current rates, you may likely not gain any financial benefit from refinancing your mortgage.