In recent years, Americans have seen mortgage interest rates drop to historically low levels, prompting many borrowers to refinance their existing home loans. These refinance loans replace homeowners’ current mortgages with new loans and new terms, often with lower interest rates and evenOn the established equity of their home.
As interest rates begin to rise again, however, others may be wondering– or if it makes more sense to wait. So, let’s take a look at where mortgage refinance rates currently sit. We’ll also break down how they’ve changed in recent years — and why a refinance might still be worth pursuing.
If you think you might benefit from refinancing your mortgage, answer a few short questions to see what you qualify for.
What are the mortgage refinance rates currently?
According to data from Freddie MacThe average mortgage interest rate on a 30-year fixed-rate loan as of February 2023 was 6.09%.
While mortgage refinance rates may vary slightly from mortgage origination loan rates, these numbers show a trend that’s consistent across the board: A mortgage refinance will cost you more in interest today than it did a year or two ago.
A standard home mortgage loan is an installment-based loan that runs for 15 or 30 years. Home buyers can choose between a fixed or variable interest rate, which determines how much it will cost them to repay that loan.
If the market interest rate changes when the loan is originated (opened) and when it is repaid, however, this can often mean refinancing the entire loan. This refi replaces the original home mortgage loan, ideally with lower interest rates and better repayment terms.
Answer a few simple questions and determine if a mortgage refinance works for you, or use the calculator below to crunch the numbers.
Mortgage refinance rates during the height of the pandemic
During the pandemic, interest rates on home mortgages fell to the lowest numbers we’ve ever seen, further fueling a flow of home buying (and reducing market inventory) that is only now beginning to slow. These rates have come down to just 2.65% in January 2021.
With interest rates this low, it only made sense for a number of homeowners to jump at the chance of a mortgage refinance. And of course, that happened. More than four times as many refinance loans came in 2021 as compared to 2018, Consumer Finance Protection Bureau (CFPB).
But when rates are not so low anymore,.
Why mortgage refinancing is still worth pursuing
Prices have risen from these historic lows, and no one knows when (or if) they will return.
However, it’s important to remember that refinancing a mortgage loan can still be a wise financial decision today. After all, although mortgage rates are higher now than they were in 2020-2021, they are still low by historical standards.
In 2000, the average mortgage interest rate peaked at 8.64%. Homebuyers in the mid-1980s saw rates as high as 14.68%. In 1981 the rate sat at an all-time high of 18.39%.
Despite these numbers, today’s average interest rates are still “low” by all accounts.
At the end of the day, the decision to refinance a mortgage depends on your specific loan terms and goals. If today’s rate is lower than what you’re paying on your current mortgage, refinancing can potentially save you a lot of money in interest, lower your monthly payment, pay off your home faster, or all three.
The goal of a refinance isn’t limited to lowering your interest rate, either. Homeowners can also use oneTo pull from their home equity, especially if they are able to lock in a competitive rate. This money can be used to pay off debt, fund a home renovation, or cover major expenses like college tuition or a wedding.
No one knows what interest rates will do going forward, or how high they will go. If you are considering refinancing your mortgage,May still be.
Talk to a mortgage refinancing expert today or use the table below to review some of the top providers on the market.