Photo by Kurt Wittman/Education Images/Universal Images Group via Getty Images
Today's average refinance rates
Refinancing your mortgage
Compare today's average mortgage rates on July 5, 2024 to a week ago, using interest rate data collected by Bankrate as reported by lenders across the United States.
Mortgage interest rates are always changing, but they're likely to go down this year. To get the lowest interest rate, compare offers from different lenders. Enter your information below to get a custom quote from CNET's partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use to compare multiple mortgage rates.
Current trends in refinancing rates
When mortgage rates hit record lows during the pandemic, homeowners were able to score lower interest rates, sparking a refinancing boom. But with the average mortgage rate now sitting at about 7%, taking out a new mortgage isn't as financially viable.
Expectations were high earlier this year that the Fed would cut interest rates this summer, but the past few months have made it clear to investors that persistently high inflation and a strong labor market mean the Fed will take longer than expected to cut rates.
Rising mortgage rates make refinancing less attractive for homeowners and more likely to hold on to their existing mortgages.
What you need to know about refinance rate trends in 2024
“There's a good chance that rates will be lower than they are today by the end of 2024,” says Keith Gumbinger, vice president at mortgage information site HSH.com. But it's hard to predict exactly where mortgage rates will ultimately go, because it depends on economic data that's not yet available.
If inflation continues to improve and the Fed is able to cut interest rates, mortgage refinance rates could be between 6% and 6.5% by the end of the year.
But data showing rising inflation could make investors rethink the possibility of the Fed cutting rates, sending mortgage rates higher, according to Orfe Dibongai, senior economist at Zillow Home Loans.
If you're considering refinancing, remember that you can't predict the timing of the economy. Interest rates fluctuate by the hour, day, and week and are influenced by a variety of factors. Your best bet is to keep an eye on daily rate fluctuations and create a strategy to take advantage of any large percentage drops, says Matt Graham of Mortgage News Daily.
Refinancing 101
When you refinance a mortgage, you take out another mortgage to pay off your first mortgage. With a traditional refinance, your new mortgage has a different term and interest rate. With a cash-out refinance, you tap into your equity in a new loan that's larger than your existing mortgage balance and receive the difference in cash.
Refinancing can be a great financial move if you can achieve a lower interest rate or pay off your mortgage in a shorter period of time, but consider if it's the right choice for you. A drop in interest rates of 1% or more can be an incentive to refinance and can significantly reduce your monthly payments.
How to find the best refinance rate
Interest rates advertised online often require certain conditions in order to qualify. Your personal interest rate will depend on market conditions and your specific credit history, financial profile, and application. If you have a high credit score, a low credit utilization ratio, and a history of consistently making on-time payments, you will usually qualify for the best interest rate.
30-year fixed rate refinance
For a 30-year fixed refinance, the average interest rate is currently 7.11%, up 12 basis points from a week ago. (One basis point is equal to 0.01%.) With a 30-year fixed refinance, monthly payments are typically lower than with a 15- or 10-year refinance, but it takes longer to pay off and you typically pay more in interest over the long term.
15-year fixed rate refinance
The average interest rate on a 15-year fixed refinance loan is currently 6.57%, up 4 basis points from last week. A 15-year fixed refinance loan will likely result in a higher monthly payment than a 30-year loan, but you'll save more money in the long run because you'll pay off your loan faster. Also, 15-year refinance rates are typically lower than 30-year refinance rates, so you'll save more money in the long run.
10-year fixed rate refinance
The average interest rate on a 10-year fixed refinance loan is currently 6.40%, down 18 basis points from last week. 10-year refinances typically have the lowest interest rates of all refinance terms but the highest monthly payments. A 10-year refinance can help you pay off your mortgage faster and save money on interest, but be prepared for a higher monthly payment.
To get the best refinance rate, make sure your application is as strong as possible by getting your finances in order, using credit responsibly, and regularly monitoring your credit. Also, don't forget to talk to multiple lenders to compare offers.
Reasons to refinance your mortgage
Homeowners typically refinance to save money, but there are other reasons why people refinance. Here are the most common reasons homeowners refinance:
To lower your interest rate: If you can secure an interest rate that’s at least 1% lower than your current mortgage rate, refinancing makes sense. To switch mortgage types: If you have an adjustable-rate mortgage and want more security, you can 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 as long as you have 20% of your own money down. To change your loan term: Refinancing to a longer loan term could lower your monthly payments. Refinancing to a shorter term could save you money on interest in the long run. To utilize your own funds through a cash-out refinance: Replacing your mortgage with a larger loan allows you to receive the difference in cash to cover a big expense. To get someone off your mortgage: In the case of a divorce, you can apply for a new mortgage in your name alone and use the funds to pay off your existing mortgage.
Recommended articles
Compare current refinance rates for June 2024
Compare current refinance rates for June 2024
Refinancing your mortgage: how it works
Refinancing your mortgage: how it works
30-year loan refinancing rates in July 2024
30-year loan refinancing rates in July 2024
15-Year Mortgage Refinance Rates July 2024
15-Year Mortgage Refinance Rates July 2024
How to refinance your mortgage
How to refinance your mortgage
How does a cash-out refinance work?
How does a cash-out refinance work?
July 2024 VA Refinance Rates