Various mortgage refinance rates went up again today, making some homeowners wonder if it’s still a good time to refinance. There were increases in the average rates for 10-year fixed, 15-year fixed and 30-year fixed refinances, and rates are expected to rise throughout 2022. If you’re in the market for a refi, make sure to first think about your goals and circumstances, and always compare offers to find a lender who can best meet your personal needs.
30-year fixed-rate refinance
The current average interest rate for a 30-year refinance is 3.87%, an increase of 12 basis points compared to one week ago. (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
The current average interest rate for 15-year refinances is 3.23%, an increase of 8 basis points compared to one week ago. A 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan. But you’ll save more money over time, because you’re paying off your loan quicker. 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
For 10-year fixed refinances, the average rate is currently at 3.25%, an increase of 14 basis points compared to one week ago. You’ll pay more every month with a ten-year fixed refinance compared to a 30-year or 15-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. But you should confirm that you can afford a higher monthly payment by evaluating your budget and overall financial situation.
Where rates are headed
We started 2022 with low refinance rates, but there’s been an uptick recently due to two major factors: inflation and economic growth. That said, rates can always rise and fall for many reasons. The spread of omicron, for instance, kept rates low throughout December and the start of the new year. Overall, rates are expected to go up this year, particularly with the Federal Reserve’s decision to reduce its bond purchases and increase interest rates.
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 reported by lenders across the US:
Average refinance interest rates
|Product||Rate||A week ago||Change|
|30-year fixed refi||3.87%||3.75%||+0.12|
|15-year fixed refi||3.23%||3.15%||+0.08|
|10-year fixed refi||3.25%||3.11%||+0.14|
Rates as of Feb. 4, 2022.
How to find the best refinance rate
It’s important to understand that the rates advertised online may not apply to you. Market conditions aren’t the only factor in interest rates; your particular application and credit history will also play a large role.
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. Researching interest rates online is always a good idea, but you’ll need to connect with a mortgage professional to get your exact refinance rate. And don’t forget about fees and closing costs which may cost a hefty amount upfront.
Since the beginning of the pandemic, a lot of lenders have been stricter with who they approve for a loan. This means that if you don’t have great credit ratings, you might not be able to take advantage of lowered interest rates — or qualify for a refinance in the first place.
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.
Is now a good time to refinance?
Generally, it’s a good idea to refinance if you can get a lower interest rate than that your current interest rate, or if you need to change your loan term. It’s true that in the past year, interest rates have been at a historic low. But when deciding whether to refinance, be sure to take into account other factors besides market interest rates.
A refinance may not always make financial sense. Consider your personal goals and financial circumstances. How long do you plan on staying in your home? Are you refinancing to decrease your monthly payment, pay off your house sooner — or for a combination of reasons? And don’t forget about fees and closing costs, which can add up.
Note that some lenders have tightened their requirements since the beginning of the pandemic. If you don’t have a solid credit score, you may not qualify for the best rate. Refinancing at a lower interest rate can save you money in the long run and help you pay off your loan sooner. But a careful cost-benefit analysis is necessary to confirm that doing so makes sense.