Mortgage refinance rates were mixed, but one key rate ticked downward.
The national average for a 30-year fixed-rate refinance was down, but the average rate on a 15-year fixed rose. Meanwhile, the average rate on 10-year fixed refis advanced.
Refinancing rates are constantly changing, but they continue to represent a bargain compared to rates before the Great Recession. If you’re in the market to refinance, it may make sense to go ahead and lock if you see a rate you like.
30-year fixed refinance
The average 30-year fixed-refinance rate is 3.09 percent, down 2 basis points from a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 3.37 percent.
At the current average rate, you’ll pay $426.47 per month in principal and interest for every $100,000 you borrow. That’s lower by $1.09 than it would have been last week.
You can use Bankrate’s mortgage calculator to get a handle on what your monthly payments would be and see the effect of adding extra payments. It will also help you calculate how much interest you’ll pay over the life of the loan.
15-year fixed refinance
The 15-year fixed refi average rate is now 2.54 percent, up 1 basis points since the same time last week.
Monthly payments on a 15-year fixed refinance at that rate will cost around $669 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll come out thousands of dollars ahead over the life of the loan in total interest paid and build equity much more quickly.
10-year fixed refinance
The average rate for a 10-year fixed-refinance loan is 2.61 percent, up 1 basis point from a week ago.
Monthly payments on a 10-year fixed-rate refi at 2.61 percent would cost $947.25 per month for every $100,000 you borrow. As you can see, the substantial savings in interest costs you’ll reap with that short 10-year term comes with the downside of a much larger monthly payment.
Where rates are headed
To see where Bankrate’s panel of experts expect rates to go from here, check out our Rate Trend Index.
Want to see where rates are right now? Lenders nationwide respond to Bankrateâ€™s weekday mortgage rates survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of purchase loans:
|30-year fixed refi||3.09%||3.11%||-0.02|
|15-year fixed refi||2.54%||2.53%||+0.01|
|10-year fixed refi||2.61%||2.60%||+0.01|
Rates as of September 11, 2020.
Want to see where rates are right now? See refinance rates for a variety of loan options here.
How to decide whether to lock in your rate
A rate lock allows you to freeze the interest rate your lender extends to you for a specified period of time. Between the time you apply for a mortgage refinance and close on it, the rate lock will protect you from rising rates.
What influences mortgage refinance rates
Mortgage rates are influenced by a range of economic factors, from inflation to unemployment numbers. Typically, higher inflation means higher interest rates and vice versa. As inflation rises, the dollar loses value, which in turn drives off investors for mortgage-backed securities, causing the prices to fall and yields to climb. When yields climb, rates get more expensive for borrowers.
People typically buy more homes when the economy is strong, driving demand for mortgages. Increased demand can cause an increase in rates. Less demand can lead to lower rates.
Current refinance rate landscape
Refinance rates have been volatile since the COVID-19 pandemic upended the U.S. economy, but overall they have been very low. Mortgage rates can rise and fall from week to week, but rates are consistently below 4 percent and even dipping into the mid to low 3s. This is an especially good time for people with good to excellent credit to lock in a low rate for a purchase loan. However, lenders are also raising credit standards for borrowers and demanding higher down payments as they try to dampen their risks.
Methodology: The rates you see above are Bankrate.com Site Averages. These calculations are run after the close of the previous business day and include rates and/or yields we have collected that day for a specific banking product. Bankrate.com site averages tend to be volatile — they help consumers see the movement of rates day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on which institutions’ rates we gather on a particular day for presentation on the site.
To learn more about the different rate averages Bankrate publishes, see “Understanding Bankrate’s Rate Averages.”