Yes, mortgage rates continue to increase — but it’s still a great time to refinance your home. Though the 15-year fixed and 30-year fixed rates are up a handful of basis points from last week, they’re still quite low. And the overall economic conditions that have led to historically low rates over the past two years remain largely in place: surging home values, COVID-19 migration and low interest rates. As such, the market is quite favorable for homeowners looking to refinance, even though mortgage rates aren’t quite as low as they were earlier this year.
30-year fixed-rate refinance
The average 30-year fixed refinance rate right now is 3.17%, an increase of 9 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. Because of this, a 30-year refinance can be a good idea if you’re having trouble making your monthly payments. Be aware, though, that interest rates will typically be higher compared to a 15-year or 10-year refinance, and you’ll pay off your loan at a slower rate.
15-year fixed-rate refinance
The average 15-year fixed refinance rate right now is 2.41%, an increase of 5 basis points over last week. With a 15-year fixed refinance, you’ll have a larger monthly payment than a 30-year loan. On the other hand, you’ll save money on interest, since you’ll pay off the loan sooner. 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
The current average interest rate for a 10-year refinance is 2.37%, an increase of 7 basis points over last week. 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 track refinance rate trends using information collected by Bankrate, which is owned by CNET’s parent company. Here’s a table with the average refinance rates provided by lenders across the country:
Average refinance interest rates
|Product||Rate||A week ago||Change|
|30-year fixed refi||3.17%||3.08%||+0.09|
|15-year fixed refi||2.41%||2.36%||+0.05|
|10-year fixed refi||2.37%||2.30%||+0.07|
Rates as of Oct. 13, 2021.
How to find the best refinance rate
When looking for refinance rates, know that your specific rate may differ from those advertised online. Your interest rate will be influenced by market conditions as well as your credit history and application.
Generally, you’ll want a high credit score, low credit utilization ratio, and a history of making consistent and on-time payments in order to 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.
It’s also worth noting that in recent months, lenders have been stricter with their requirements. As such, you may not qualify for a refinance — or a low rate — if you don’t have a solid credit rating.
One way to get the best refinance rates is to strengthen your borrower application. If you haven’t already, try to improve your credit by monitoring your credit reports, using credit responsibly, and managing your finances carefully. Also be sure to compare offers from multiple lenders in order to get the best rate.
When should I refinance?
Most people refinance because the market interest rates are lower than their current rates or because they want to change their loan term. While interest rates have been low in the past few months, you should look at more than just the market interest rates when deciding if a refinance is right for you.
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? Also keep in mind that closing costs and other fees may require an upfront investment.
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. If you can get a lower interest rate or pay off your loan sooner, refinancing can be a great move. But carefully weigh the pros and cons first to make sure it’s a good fit for your situation.