Today’s mortgage refinance rates move lower | July 21, 2021

Daily Refinance blog

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Several closely watched refinance rates receded today compared to a week ago.

  • 30-year fixed refinance rate: 2.96%, –0.14 vs. a week ago
  • 15-year fixed refinance rate: 2.32%, –0.11 vs. a week ago
  • 10-year fixed refinance rate: 2.32%, -0.13 vs. a week ago

30-year fixed refinance

The average 30-year fixed-refinance rate is 2.96 percent, down 14 basis points compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 3.25 percent.

At the current average rate, you’ll pay $415.16 per month in principal and interest for every $100,000 you borrow. That’s a decline of $6.44 from last week.

You can use Bankrate’s mortgage calculator to estimate your monthly payments 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 average rate for a 15-year fixed refi is 2.32 percent, down 11 basis points over the last seven days.

Monthly payments on a 15-year fixed refinance at that rate will cost around $384 per $100,000 borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment would, 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 2.32 percent, down 13 basis points over the last seven days.

Monthly payments on a 10-year fixed-rate refi at 2.32 percent would cost $383.78 per month for every $100,000 you borrow. If you can manage that hefty monthly payment, you’ll enjoy even more interest cost savings than you would with a 15-year term.

What is a mortgage refinance?

Refinancing your mortgage means taking out a new home loan. In the process, you’ll fully pay off your existing loan, and then start payments on a new one. The two most common kinds of mortgage refinances are rate-and-term changes — which result in a new interest rate and a reset payment clock — and cash-out refinances. The latter allow homeowners to take advantage of their equity by taking out a new mortgage with a larger principal based on the home’s current value.

30-year refi? 15-year refi? Which is right for me?

No matter what kind of refinance you decide to undertake, once you close on your new loan, the payment clock goes back to zero. For example, if you take out a new 30-year mortgage, you’ll have another 30 years of payments ahead of you.

That said, a 30-year refinance is the right choice for many people. Extending the term of your loan means lower monthly payments, which can ease the squeeze if you find yourself with a tight budget.

A 15-year refi has some advantages, too, namely that you pay a lot less interest over the life of the loan. Because 15-year loans tend to have lower interest rates than their 30-year counterparts and a shorter repayment window, the overall savings can be significant. Keep in mind, though, that a short repayment window is a double-edged sword. It does help you save in the long term, but with less time to pay, 15-year mortgages have higher monthly payments.

Here are sample payments on a $300,000 mortgage at 3 percent interest:

Term Monthly payment Total cost
30-year $1,265 $455,332
15-year $2,072 $372,914

What does it cost to refinance?

Refinance costs can change based on where you’re located, the lender you’re working with and a number of other factors. The general guidance, however, is that costs are around 2 to 5 percent of the loan’s principal amount. On a $300,000 mortgage, that equates to $6,000 to $15,000 in closing costs.

Can I save money with a refinance? Is now a good time to refi?

Yes, depending on your situation. Especially with mortgage rates near all-time lows, it’s a great time to refinance. If you have a loan that you’ve been holding since before 2020, you’re almost guaranteed to be able to refinance to a lower-cost loan. That can mean significant savings month to month and overall, so it’s worth looking into.

Keep in mind, however, you’ll want to calculate your break-even timeline. If you’re planning to move soon, you may not save enough to make up for your closing costs before you do.

Where are refinance rates headed?

Since the beginning of the coronavirus pandemic in 2020, rates have been hovering around historic lows. Industry experts say this can’t last forever, and most expect rates to end 2021 higher and on an upward trend.

Nearer term, however, borrowers have caught another reprieve. With the Federal Housing Finance Agency’s announcement that it will end the 0.5 percent fee on most refinances, you can expect rates to hold steady or fall in the next few weeks.

Meanwhile, Federal Reserve policy seems poised to keep interest rates on bonds low, which could keep mortgage rates favorable into the fall.

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? See local mortgage rates.

Average mortgage rates
Product Rate Change Last week
30-year fixed refi 2.96% 0.14 3.10%
15-year fixed refi 2.32% 0.11 2.43%
10-year fixed refi 2.32% 0.13 2.45%
Last updated July 21, 2021.

How to shop for a mortgage

Comparing offers is critical to get the best deal on your mortgage. Make sure to get quotes from at least three lenders, and pay attention not just to the interest rate but also to the fees they charge and other terms. Sometimes it’s a better deal to choose a slightly higher interest loan if the other aspects are favorable.

Steps to get the best mortgage rate

  • Shop around
  • Do your homework to understand the mortgage market in your area
  • Consider working with a mortgage broker
  • Don’t try to time the market — rates change nearly constantly, and you could lose out on a good deal if you wait

Minimum credit scores for different kinds of mortgages

Different mortgages have different minimum requirements for their borrowers. Although lenders are free to adjust these numbers as they please, here are the most common credit score minimums for various mortgage types:

If your credit score is less than 500, work on improving it before applying for a mortgage, because most lenders won’t issue a loan to someone with a score of 499 or lower. Conversely, if your credit score is higher than these minimums, you may be able to secure a better interest rate.

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.”

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