Today's refi rates advance | May 19, 2023
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2 of 3 key refinance rates trended upward today versus this time last week, according to data compiled by Bankrate.
- 30-year fixed refinance rate: 7.09%, +0.11 vs. a week ago
- 15-year fixed refinance rate: 6.38%, +0.20 vs. a week ago
- 10-year fixed refinance rate: 6.48%, +0.27 vs. a week ago
For the 10th consecutive time, the Federal Reserve raised rates at the conclusion of its May 3 meeting — but by a modest 0.25 percentage point, or 25 basis points. Housing economists say this will be the final rate hike of the Fed’s post-pandemic war on inflation. While the Fed doesn’t directly affect mortgage rates, the central bank’s policy does set the overall tone.
”Mortgage rates don’t take direct cues from the Fed and will instead respond to the outlook for the economy and inflation," says Greg McBride, Bankrate’s chief financial analyst. "A slowing economy and an easing of inflation pressures are the prerequisites for lower mortgage rates."
Although refinance rates are much now higher than they were in recent years, in general, you could save thousands of dollars over the life of your mortgage by getting multiple offers.
30-year fixed refinance
The average 30-year fixed-refinance rate is 7.09 percent, up 11 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.03 percent.
At the current average rate, you'll pay $671.36 per month in principal and interest for every $100,000 you borrow. That's an increase of $7.40 over what you would have paid last week.
You can use Bankrate's mortgage calculator to figure out 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 for a 15-year refi is currently running at 6.38 percent, up 20 basis points since the same time last week.
Monthly payments on a 15-year fixed refinance at that rate will cost around $865 per $100,000 borrowed. That's clearly much higher than the monthly payment would be on a 30-year mortgage at that rate, 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 faster.
10-year fixed refinance
The average rate for a 10-year fixed-refinance loan is 6.48 percent, up 27 basis points since the same time last week.
Monthly payments on a 10-year fixed-rate refi at 6.48 percent would cost $1,134.46 per month for every $100,000 you borrow. As you can see, the hefty savings in interest costs you'll reap with that short 10-year term comes with the downside of a much larger monthly payment.
Where are mortgage refinance rates headed?
Most housing economists expect mortgage rates to fall beneath 6 percent by the end of the year. 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.
| Product | Rate | Change | Last week |
|---|---|---|---|
| 30-year fixed refi | 7.09% | 0.11 | 6.98% |
| 15-year fixed refi | 6.38% | 0.20 | 6.18% |
| 10-year fixed refi | 6.48% | 0.27 | 6.21% |
Last updated May 19, 2023.
What is a 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 home equity by taking out a new mortgage with a larger principal based on the home’s current value.
30-year refi? 15-year refi? Cash-out refi? What 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. So, for example, if you take out a new 30-year mortgage, you’ll have another 30 years of payments in front of you.
That said, a 30-year mortgage refinance is the right choice for a lot of people. Extending the term of your loan means lower monthly payments, which can help if you have a tight budget.
A 15-year refinance has some advantages, too, namely that you pay a lot less interest over the life of the loan. Fifteen-year mortgages tend to charge lower rates than 30-year mortgages, and they also have a shorter repayment window, so 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 run, but with less time to pay, 15-year mortgages have higher monthly payments.
Here are sample payments on a $300,000 mortgage at 6 percent interest:
| Term | Monthly payment | Total cost |
|---|---|---|
| 30-year | $1,798 | $647,934 |
| 15-year | $2,531 | $455,746 |
A new mortgage can also help you tap your home equity if you opt for a cash-out option. If you have enough equity in your home, you can apply for a new mortgage with a larger principal balance and take the difference from what you owe on your old loan in cash. Doing that can allow you to finance other spending at a low rate compared with other forms of borrowing. Some of the most common uses for cash-out funds are home improvements, debt consolidation or education financing.
What does a mortgage refinance cost?
Refinance costs can change based on where you’re located, the lender you’re working with and a number of other factors. The general rule of thumb, however, is that costs are around 2 to 5 percent of the loan’s principal amount. On a $300,000 mortgage, that equals $6,000 to $15,000 in closing costs.
How much can you save by refinancing? Is it a good time to refi?
Because many homeowners locked in record-low rates in 2020 and 2021 and they've since since gone up, refinancing generally isn't a money-saving move at this time. Consider refinancing in the future if prevailing interest rates fall below the rate you currently have on your mortgage.
Remember: 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.
How to shop for a mortgage
Shopping around is crucial 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.
Tips for getting the best mortgage rate
- Shop around
- Do your research 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
Minimum credit scores for different kinds of mortgages
Different mortgages have different minimum requirements for their borrowers. Although lenders can adjust these requirements as they please, here are the most common credit score minimums for some common mortgage types:
- Conforming: 620
- Jumbo: 700
- FHA: 580 (or 500 if you have at least a 10 percent down payment)
- VA: Varies by lender, but typically between 580 and 640
- USDA: Varies by lender, but typically between 580 and 640
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. However, if your credit score is higher than these minimums, you may be able to get 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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