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Today, numerous benchmark refinance rates declined.
Both the 15-year fixed and 30-year fixed saw their mean rates go down. The average rate on 10-year fixed refinance mortgages also sank.
Throughout the first months of 2022 refinance rates have been on a tear, increasing dramatically. We’ve already seen multiple increases in short-term interest rates and the Fed has plans for more to come.
In the current financial climate, homeowners should carefully consider whether it’s the right time to refinance. Simply put, the cost of refinancing is increasing because rates are higher. With that in mind, your refinance rate isn’t the only thing that matters. Refinance closing costs can average 3% to 6% of the loan balance and in the short run, could be more expensive than the interest you pay.
Let’s take a look at where refi rates are and what it means for you.
The average mortgage refinance rates are as follows:
Check out mortgage refinancing rates for your area here.
Refinance Rate Forecast: What Is Driving Mortgage Rate Change?
June’s Consumer Price Index (CPI) reported annual inflation increased again in July to 9.1%. . This still puts it on par with the 40-year highs we’ve seen in the past few months. And that means refi rates are likely to see more increases as long as inflation remains high.
In response to high inflation that has lasted longer than initially anticipated, the Federal Reserve has begun increasing interest rates. Adding to the issue is Russia’s invasion of Ukraine and China’s COVID-19 lockdowns. Both of these geopolitical events threaten to compound existing supply chain issues and add to inflation. In the months to come is when we could really start to see these events impact us. “The pain of the April and March lockdown is not yet fully being felt in the manufacturing sector outside of China,” Lindsey Piegza, chief economist at Stifel Financial told NextAdvisor.
If we end up with high inflation for an extended period of time, then the chances that the Federal Reserve dramatically increases rates goes up.
Should You Consider a Refinance Right Now?
Generally speaking, homeowners could save thousands with a rate and term refinance if their new rate is 0.75% to 1% below their current rate. And the number of homeowners with rates well above the current market rates has …….