Both 15-year fixed and 30-year fixed refinances saw their average rates rise Tuesday. The average rate on 10-year fixed refinance also increased.
Like mortgage rates, refinance rates fluctuate on a daily basis. With inflation at a 40-year high, the Federal Reserve has hiked the federal funds rate four times this year and is poised to do so again in 2022 to try to slow rampant inflation. Though mortgage rates are not set by the central bank, these federal rate hikes increase the cost of borrowing money. Whether refinance rates will continue to rise or fall will depend on what happens next with inflation. If inflation begins to cool, rates will likely follow suit. But if inflation remains high, we could see refinance rates maintain an upward trajectory. If rates for a refi are currently lower than your existing mortgage rate, you could save money by locking in a rate now. As always, consider 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 average rate for a 30-year fixed refinance loan is currently 6.01%, an increase of 12 basis points from what we saw 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. This makes 30-year refinances good for people who are having difficulties making their monthly payments or simply want a bit more breathing room. However, interest rates for a 30-year refinance will typically be higher than rates for a 10- or 15-year refinance. It’ll also take you longer to pay off your loan.
15-year fixed-rate refinance
The average 15-year fixed refinance rate right now is 5.20%, an increase of 3 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. But you’ll save more money over time, because you’re paying off your loan quicker. 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
For 10-year fixed refinances, the average rate is currently at 5.29%, an increase of 12 basis points from what we saw the previous week. You’ll pay more every month with a 10-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 help you pay off your house much faster and 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 rates dropped to historic lows, but they have been mostly climbing since the beginning of this year. Refinance rates rose 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 another 0.75 percentage points and is prepared to raise rates again this year to slow the economy. Still, it’s unclear exactly what will happen next in the market. If inflation continues to rise, rates are likely to climb. But if inflation starts to cool, rates could level off and begin to decline.
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 | Last week | Change |
|---|---|---|---|
| 30-year fixed refi | 6.01% | 5.89% | +0.12 |
| 15-year fixed refi | 5.20% | 5.17% | +0.03 |
| 10-year fixed refi | 5.29% | 5.17% | +0.12 |
Rates as of Sept. 6, 2022.
How to find the best refinance rate
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, 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 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 rather 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.
