Refinance Rates, June16, 2022: Rates Soar Following Fed’s Interest Rate Hike
Multiple closely followed mortgage refinance rates moved higher today. There was a dramatic increase in interest rates for 30-year fixed-rate refinances and 15-year fixed refinances today. The average rate on 10-year fixed refinance loans also made extremely significant gains.
Refinance rates have been consistently rising since the beginning of 2022, and homeowners can expect to see rates continue to go up over the course of this year. In response to inflation, which is at a 40-year high, the Federal Reserve has hiked interest rates three times already, and plans to raise them throughout the rest of 2022. That means if you’re looking to shave dollars and interest off your current monthly mortgage payments, these could be the lowest rates you’ll see for a while.
Make sure to think about 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 current average interest rate for a 30-year refinance is 5.89%, an increase of 36 basis points from what we saw one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance. If you’re having difficulties making your monthly payments currently, a 30-year refinance could be a good option for you. 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 rate for a 15-year fixed refinance loan is currently 5.10%, an increase of 35 basis points compared to one week ago.
With a 15-year fixed refinance, you’ll have a larger monthly payment than a 30-year loan. However, you’ll also be able to pay off your loan quicker, saving you money over the life of the loan. 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 average 10-year fixed refinance rate right now is 5.16%, an increase of 50 basis points compared to one week ago.
Compared to a 30-year and 15-year refinance, a 10-year refinance will usually have a lower interest rate but higher monthly payment. 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. 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 steadily climbing since the beginning of this year.
Refinance rates are rising 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 0.75 percentage points — the highest increase in almost three decades — and plans to raise them several more times throughout 2022 to slow the economy. That means it’s a good idea to take advantage of refinancing now and lock in a decent rate before they continue going up.
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 supplied by lenders nationwide:
Average refinance interest rates
| 30-year fixed refi | 5.89% | 5.53% | +0.36 |
| 15-year fixed refi | 5.10% | 4.75% | +0.35 |
| 10-year fixed refi | 5.16% | 4.66% | +0.50 |
Rates as of June 16, 2022.
How to shop for refinance rates
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, 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 to find the best rate. 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 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.
