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The 30-year fixed mortgage refinance rate topped 4% Monday.
A driving force behind rates topping 4% is high inflation, with the Bureau of Labor Statistics last week reporting year-over-year inflation of 7.5% in January. That’s the highest in 40 years.
Mortgage rates have risen so far this year from below 3.3% to their current level in part due to expectations that the Federal Reserve will begin to raise its benchmark short-term interest rate to address that high inflation. Experts say rates are still fairly low compared to historical standards. Refinancing might still make sense for homeowners who have rates well above what you can get from lenders now, and it might also make sense if your goal is to get a cash-out refinance to pay off higher-interest debt or pay for big expenses, like home improvements or education.
Here are the average rates for 30-year, 15-year, and 10-year refinance loans are:
Compare refinance rates for a wide range of different loans here.
2022 Refinance Rate Trends
Refinance and mortgage interest rates are expected to rise in 2022, according to experts. One reason for this forecast increase in rates is the Fed’s move to begin reducing its purchases of mortgage-backed securities. For last year, inflation was 7%, which was the highest yearly level in decades, according the U.S. Bureau of Labor Statistics . Although there is potential for the Omicron variant, or other variants, to put a damper on mortgage rate increases. The threat of new Coronavirus strains, however, isn’t expected to result in a drop in rates in the long run.
How the Refinance Rate Forecast Impacts You
With interest rates remaining below 4%, refinancing can be a compelling option as these are stillhistorically low rates. However, the decision refinance involves more than just comparing interest rates. A refinance should work with your other financial goals. Refinancing may not make sense if you plan to move and sell the home with the next five years. Depending on how long you keep the new loan, the ongoing savings may not be enough to offset the upfront fees.
You may also want to turn your home’s value into cash with a home equity line of credit (HELOC). Having extra cash on hand may …….