Ahead of the Fed’s meeting in May, the 15-year fixed and 30-year fixed refinances saw their average rates decline over the past seven days. Average fixed 10-year refinancing rates have also fallen by more than a tenth of a percentage point.
Amid its ongoing fight against inflation, the Federal Reserve will meet next week to determine any further increases in the benchmark federal funds rate. If the central bank goes ahead with a rate hike, it will probably only be a quarter of a percentage point. Moreover, the Fed has indicated that continued interest rate increases will no longer be necessary to reach the 2% inflation target. Instead, the Fed will pause and keep rates where they are for an extended period of time.
Given that inflation has been steadily declining, there is a possibility that the Fed will halt its series of interest rate hikes as soon as next week. Refinance rates, like mortgage rates, fluctuate on a daily basis and could see more movement in response.
“Going forward, mortgage rates are likely to continue to fluctuate as the housing market continues to respond to the uncertainty that permeates today’s economy,” says Jacob Channel, LendingTree’s chief economist, loan market.
With the Fed aggressively raising the federal funds rate in 2022, refinancing rates have picked up, but we’re seeing signs that rates may start to slowly rise as inflation eases.
For the first two meetings of 2023, the Fed has adopted a slower pace of increases as it waits to see the cumulative effects of policy changes on inflation.
And while inflation remains high, inflation has been falling steadily each month since its peak in June 2022. After its March meeting, the Fed indicated that “some additional policy tightening” may be necessary to reach its 2% inflation target.
Looking at last year’s average mortgage rate data, mortgage rates peaked in late 2022 and have been trending lower since then. We’re still a long way from record low refinancing rates for 2020 and 2021, but borrowers could see lower interest rates in 2023.
“With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, especially if the economy and labor market slow significantly,” says Greg McBride, CFA and Chief Financial Analyst at Bankrate. (The bank, like CNET Money, is owned by Red Ventures.) It expects 30-year fixed mortgage rates to end the year near 5.25%.
No matter where prices are headed, homeowners should not focus on market timing and should instead decide whether refinancing makes sense for their financial situation. As long as you can get an interest rate that is lower than the current rate, refinancing is likely to save you money. Do the math to see if it makes sense for your current finances and goals. If you decide to refinance, be sure to compare rates, fees, and the annual percentage rate — which shows the total cost of borrowing — from different lenders to find the best deal.
Fixed rate refinancing for 30 years
The current average interest rate for a 30-year refinance is 7.00%, down 9 basis points from this time last week. (a basis point equals 0.01%). A fixed-term 30-year refinancing typically has lower monthly payments than a 15-year or 10-year refinancing. This makes 30-year refinances good for people who are having trouble making their monthly payments or simply want a little more breathing room. Be aware, however, that interest rates will usually be higher compared to a 10- or 15-year refinance, and you’ll pay off your loan at a slower rate.
Fixed rate refinancing for 15 years
The average rate for a 15-year fixed refinance loan is currently 6.23%, down 10 basis points from a week ago. A 15-year hard refinancing is more likely to increase your monthly payment than a 30-year loan. On the one hand, you will save money on interest, because you will pay off the loan sooner. Interest rates on 15-year refinancing also tend to be lower than those for 30-year refinances, so you’ll save more in the long run.
Fixed rate refinancing for 10 years
For fixed 10-year refinancings, the average rate is currently 6.35%, down 11 basis points from what we saw in the previous week. Compared to a 15 or 30 year refinance, a 10 year refinance usually has a lower interest rate but higher monthly payments. A 10-year refinance can be a good deal, because paying off your home’s value sooner will help you save interest in the long run. Just be sure to look carefully at your budget and current financial situation to make sure you can afford higher monthly payments.
Where rates are headed
At the start of the pandemic, refinancing rates hit a historic low. But in early 2022, the Fed began raising interest rates in an effort to curb runaway inflation. While the Fed does not directly set mortgage rates, the increase in federal interest rates has increased the cost of borrowing among most consumer loan products, including mortgages and refinancing. Mortgage rates hit a 20-year high in late 2022.
Recent data shows that headline inflation has been declining slowly but steadily since it peaked in June 2022, but it is still well above the 2% inflation target set by the Fed. After raising interest rates by 25 basis points in March, the Fed indicated (PDF) that it plans to slow – but not stop – the pace of rate hikes throughout 2023. These two factors are likely to contribute to a gradual pull-down of post-mortgage rates and re-pricing. financing this year, though consumers shouldn’t expect a sharp decline or a return to pandemic-era lows.
We track refinance rate trends using information collected by Bankrate. Below is a table of average refinancing rates reported by lenders nationwide:
Average interest rates on refinancing
| project | an average | Since a week | changes |
|---|---|---|---|
| Stable reference for 30 years | 7.00% | 7.09% | -0.09 |
| Stable reference for 15 years | 6.23% | 6.33% | -0.10 |
| 10 years stable reference | 6.35% | 6.46% | -0.11 |
Prices as of April 27, 2023.
How to find the best refinance rate
It is important to understand that rates advertised online often have specific eligibility requirements. Your interest rate will be affected by market conditions as well as your specific credit history, financial profile, and application.
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. You can get a good feel for average interest rates online, but be sure to speak with a mortgage professional to find out what specific rates you qualify for. To get the best refinance rates, you’ll first need to make your application as robust as possible. The best way to improve your credit ratings is to organize your finances, use credit responsibly and monitor your credit regularly. Don’t forget to talk to several lenders and shop around.
Refinancing can be a great move if you get a good rate or can pay off your loan sooner – but think carefully about whether it’s the right option for you right now.
When do I have to refinance?
Most people refinance because the market interest rates are lower than their current rates or because they want to change the term of the loan. When deciding whether to refinance, be sure to consider other factors besides market interest rates, including how long you plan to stay in your current home, the term of the loan and the amount of your monthly payment. And don’t forget about fees and closing costs, which can add up.
With interest rates rising throughout 2022, the pool of refinance applicants has contracted. If you bought your home when interest rates were lower than they are today, there may be no financial benefit in refinancing your mortgage.