If you bought a house in the last several years, don’t expect to secure a cheaper mortgage rate or save money by refinancing right now. But despite high mortgage rates, a refi could make sense for other reasons, including changing your home loan type or term length.
Both 15-year fixed and 30-year fixed refinances saw their average rates go down this week. The average rates for 10-year fixed refinances also slumped.
This month’s dip in mortgage rates is motivating some prospective buyers to come off the sidelines. But it hasn’t had quite the same effect in the refinance market: While refinance applications have increased by 7% since this time last year, they remain at low levels compared to the height of the 2020 refi boom, according to the Mortgage Bankers Association.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Many homeowners aren’t willing to sell or refinance their homes because they’re facing the same disadvantages as everyone else in the housing market right now: elevated mortgage rates, limited available inventory and expensive homes.
If you bought a house more than a year ago and your main goal is to save money, you probably won’t be able to secure a cheaper mortgage rate through refinancing right now. But a refi could make sense , including changing your mortgage type or removing someone from your mortgage.
Refinance rates for homeowners
If you decide to refinance, make sure to compare rates, fees and the annual percentage rate -- which reflects the total cost of borrowing -- from different lenders to find the best deal. Here’s a table with the average refinance rates supplied by lenders nationwide. We track refinance rate trends using data collected by Bankrate:
Today’s refinance interest rates
|Product||Rate||A week ago||Change|
|30-year fixed refi||7.71%||7.99%||-0.28|
|15-year fixed refi||7.02%||7.36%||-0.34|
|10-year fixed refi||7.12%||7.14%||-0.02|
Rates as of Nov. 20, 2023.
What to know about refinance rate trends
The Federal Reserve carried out several consecutive interest rate hikes throughout 2022 and 2023 to slow inflation, which also indirectly pushed mortgage rates to record highs. As inflation retreats, the Fed has entered a holding pattern to evaluate the impact of rate hikes on price growth and the labor market.
Though mortgage rates have recently come down from their 8% highs in response to better-than-expected inflation data, the refinance market is still at a standstill, according to Carlos Garriga, senior vice president and research director at the St. Louis Federal Reserve.
It’s difficult to forecast mortgage rate movement, but there should be less rate volatility in 2024 compared to the past year, according to Matthew Walsh, housing economist for Moody’s Analytics. That’s because it’s widely expected the Fed will hold interest rates steady until mid-2024, helping mortgage rates to stabilize. Once the central bank begins to actually cut rates, there should be more sustained downward movement.
That said, even if rates return to 7%, which would be a considerable decline from recent peaks, it could still be hard for homeowners to find many compelling or profitable reasons to refinance, said Keith Gumbinger, vice president of the mortgage site HSH.com.
In this rate environment, refinance demand is largely for cash-out refinances to help consolidate debt or fund other major expenses, according to Matt Graham of Mortgage News Daily. For those considering a refinance, Graham recommends getting in touch with a loan originator, keeping an eye on day-to-day rate changes and having a game plan to capitalize on a big-enough drop.
How to find the best refinance rate
The rates advertised online often require specific conditions for eligibility. Your personal 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. To get the best refinance rates, make your application as strong as possible by getting your finances in order, using credit responsibly and monitoring your credit regularly. And 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 whether it’s the right choice for you at the moment.
30-year fixed-rate refinance
For 30-year fixed refinances, the average rate is currently at 7.71%, a decrease of 28 basis points over this time last week. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance so it can be a good option if you’re having trouble making your monthly payments. However, a 30-year refinance loan will take you longer to pay off and will typically cost you more in interest over the long term.
15-year fixed-rate refinance
For 15-year fixed refinances, the average rate is currently at 7.02%, a decrease of 34 basis points over last week. Though a 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan, you’ll save more money over time because you’re paying off your loan quicker. Also, 15-year refinance rates are typically lower than 30-year refinance rates, which will help you save more in the long run.
10-year fixed-rate refinance
For 10-year fixed refinances, the average rate is currently at 7.12%, a decrease of 2 basis points compared to one week ago. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all refinance terms. A 10-year refinance can help you pay off your house much quicker and save on interest, but make sure you can afford the steeper monthly payment.
When should I 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, consider other factors, including how long you plan to stay in your current home, the length of your loan and the amount of your monthly payment. And don’t forget to factor in fees and closing costs, which can add up.
With mortgage refinance rates at current heights, the number of refinancing applicants has shrunk. If you bought your house when interest rates were lower than today, there is little financial benefit to refinancing your mortgage. However, homeowners can’t time the market. Regardless of where rates are headed, decide if refinancing makes sense based on your financial situation and goals.