Both 15-year fixed and 30-year fixed refinances saw their average rates rise this week. The average rate on 10-year fixed refinance also moved up.
- 30-year fixed refinance: 7.03%
- 15-year fixed refinance: 6.42%
- 10-year fixed refinance: 6.26%
Refinance rates remain relatively high, and millions of homeowners are keeping their original mortgages until rates ease more. Though home loan rates have been dipping since November, current rates are still well above the 3.5% average on existing mortgages, according to Mark Zandi, chief economist at Moody’s Analytics. And, although refinancing activity has picked up recently, the overall level of refinance applications is still very low compared to early 2021. “Rates will need to fall substantially more for refi activity to meaningfully increase,” said Zandi.
With the Federal Reserve taking its third consecutive pause from its aggressive rate-hike policy and promising interest rate cuts throughout this year, the opportunity to refinance might come sooner rather than later.
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.
Refinance rates for homeowners
In today’s high-rate environment, refinancing is less attractive. Rates are currently between 6% and 7%, but your personal interest rate will depend on your credit history, financial profile and application.
Here are the average refinance rates reported by lenders nationwide. We track refinance rate trends using data collected by Bankrate:
Today’s refinance rates
Product | Rate | A week ago | Change |
---|---|---|---|
30-year fixed refi | 7.18% | 7.16% | +0.02 |
15-year fixed refi | 6.42% | 6.28% | +0.14 |
10-year fixed refi | 6.26% | 6.15% | +0.11 |
Rates as of Jan. 24, 2024
How to choose a refinance
When you refinance your mortgage, you take out another home loan that pays off your initial mortgage. With a traditional refinance, your new home loan will have a different term and/or interest rate. With a cash-out refinance, you’ll tap into your equity with a new loan that’s bigger than your existing mortgage balance, allowing you to pocket the difference in cash.
Refinancing can be a great financial move if you score a low rate or can pay off your home loan in less time, but consider whether it’s the right choice for you. Reducing your interest rate by 1% or more is an incentive to refinance, allowing you to cut your monthly payment significantly. But today’s mortgage market conditions aren’t ideal. If you decide to refinance, compare rates, fees and the annual percentage rate -- which reflects the total cost of borrowing -- from different lenders to find the best deal.
30-year fixed-rate refinance
For 30-year fixed refinances, the average rate is currently at 7.18%, an increase of 2 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 15-year or 10-year refinance, but it will take you longer to pay off and typically cost you more in interest over the long term.
15-year fixed-rate refinance
The current average interest rate for 15-year refinances is 6.42%, an increase of 14 basis points from what we saw the previous 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
The average rate for a 10-year fixed refinance loan is currently 6.26%, an increase of 11 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.
Where refinance rates are headed
When mortgage rates hit historic lows during the pandemic, there was a refinancing boom, as homeowners nabbed lower interest rates on their home loans. But refinancing might not actually save you money right now. “Refinancing for some people will make sense if they have rates above 8%,” said Logan Mohtashami, lead analyst at HousingWire. “However, with all refinancing options, it’s a personal financial choice because of the cost that goes with the loan process,” Mohtashami said.
If economic data goes in the right direction, 2024 should lead to lower rates. “The best bet there is to keep an eye on day-to-day rate changes and have a game plan on how to capitalize on a big enough drop,” said Matt Graham of Mortgage News Daily.
Reasons why you might refinance your home
Homeowners usually refinance to save money, but there are other reasons to do so. Here are the most common reasons homeowners refinance:
- To get a lower interest rate: If you can secure a rate that’s at least 1% lower than the one on your current mortgage, it could make sense to refinance.
- To switch the type of mortgage: If you have an adjustable-rate mortgage and want greater security, you could refinance to a fixed-rate mortgage.
- To eliminate mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance to a conventional loan once you have 20% equity.
- To change the length of a loan term: Refinancing to a longer loan term could lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
- To tap into your equity through a cash-out refinance: If you replace your mortgage with a larger loan, you can receive the difference in cash to cover a large expense.
- To take someone off the mortgage: In case of divorce, you can apply for a new home loan in just your name and use the funds to pay off your existing mortgage.
How to shop for refinance rates
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.
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As an expert in mortgage rates and refinancing, I bring a wealth of knowledge and experience to the table. My understanding extends beyond the surface level, delving into the intricacies of the financial market, economic indicators, and the factors influencing mortgage rates. I stay updated with the latest developments, incorporating a comprehensive view of the subject matter.
Now, let's break down the key concepts in the provided article:
-
Mortgage Rate Updates:
- The article discusses the average rates for 30-year, 15-year, and 10-year fixed refinances.
- As of the latest data (Jan. 24, 2024), the rates are:
- 30-year fixed refinance: 7.18%
- 15-year fixed refinance: 6.42%
- 10-year fixed refinance: 6.26%
- The rates for all three terms have seen an increase compared to the previous week.
-
Current Market Conditions:
- Refinance rates are described as remaining relatively high, prompting many homeowners to hold onto their existing mortgages until rates decrease further.
- Mark Zandi, chief economist at Moody’s Analytics, notes that despite a dip in rates since November, the current rates are still well above the 3.5% average on existing mortgages.
-
Federal Reserve's Role:
- The Federal Reserve's decision to pause its rate-hike policy and promise interest rate cuts throughout the year is mentioned as a potential factor that could make refinancing more appealing in the near future.
-
Comparison of Refinance Rates:
- The article provides a comparison of refinance rates, emphasizing that, in today's high-rate environment, refinancing may be less attractive.
- It highlights the importance of individual credit history, financial profile, and application in determining the actual interest rate.
-
Trends and Predictions:
- Refinancing activity has picked up recently, but overall application levels are still low compared to early 2021.
- The suggestion is that rates would need to fall substantially more for a significant increase in refinance activity.
-
Considerations for Refinancing:
- Various aspects of refinancing are covered, including reasons why homeowners might consider it, such as securing a lower interest rate, switching mortgage types, eliminating mortgage insurance, changing the loan term, or tapping into equity through a cash-out refinance.
-
Guidance on Shopping for Refinance Rates:
- The article advises individuals to compare rates, fees, and the annual percentage rate (APR) from different lenders to find the best deal.
- It emphasizes that advertised rates online may have specific eligibility conditions and that personal interest rates are influenced by credit history, financial profile, and market conditions.
-
Expert Opinions and Predictions:
- Insights from experts like Logan Mohtashami and Matt Graham are included, providing perspectives on when refinancing might make sense and how economic data could impact rates in the future.
In conclusion, this information serves as a comprehensive guide for homeowners considering refinancing, offering insights into the current market, expert opinions, and practical considerations.