Both 15-year fixed and 30-year fixed refinances saw their mean rates trend upward this week. The average rate on 10-year fixed refinance also inched up.
On the heels of cooling inflation, the Federal Reserve opted to pause its current rate-hiking cycle. During its June meeting, the central bank decided to hold its benchmark interest rate at a range of 5.00% to 5.25%. After hiking rates aggressively since March 2022, the Fed has signaled that it will use this pause as an opportunity to study incoming economic data. Refinance rates, like mortgage rates, fluctuate on a daily basis and could see further movement in response, or they could stay generally the same.
“Mortgage rates will likely continue to move up and down on a week-to-week basis, even as the Fed pauses its rate hikes. The reason for this is because the Fed doesn’t directly set mortgage rates,” said Jacob Channel, senior economist at loan marketplace LendingTree. “That said, a pause in the Fed’s hikes could help keep refinance rates more stable than they’ve been this year.”
Current Mortgage Rates for June 2023
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With inflation falling steadily from its peak last summer, the Fed is taking a break from rate hikes. Depending on incoming inflation data, the Fed may hold rates where they are — but not cut them — until inflation reaches its 2% goal.
“Ultimately, more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates,” said Odeta Kushi, deputy chief economist at First American Financial Corporation.
As the Fed aggressively ratcheted up its federal funds rate in 2022, refinance rates spiked, but we’re seeing signs that rates may be slowly starting to level out as inflation eases.
“With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably,” said Greg McBride, CFA and chief financial analyst at Bankrate. He expects 30-year fixed mortgage rates to end the year near 5.25%.
Regardless of where rates are headed, homeowners shouldn’t focus on timing the market, and should instead decide if refinancing makes sense for their financial situation. As long as you can get a lower interest rate than your current rate, refinancing will likely save you money. Do the math to see if it makes sense for your current finances and goals. If you do decide to refinance, make sure you compare rates, fees, and the annual percentage rate — which shows the total cost of borrowing — from different lenders to find the best deal.
