Mortgage Refinance Rates Drop to Lowest Point in 18 Months

Mortgage refinance rates for 30-year loans have declined further, reaching an average of 6.51% as of Monday. This marks the most affordable 30-year refinance rate since February 9, 2023.

Similarly, rates for other refinance options—including 15-year, 20-year, and jumbo 30-year loans—also fell by 6 to 10 basis points on Monday, signaling a broad downward trend across loan types.

Key Insights

The refinance rates we share reflect average market conditions and differ from promotional teaser rates often advertised online. These teaser rates tend to highlight the most favorable offers and may require upfront points or assume ideal borrower profiles with exceptional credit scores or smaller loan amounts. Your actual rate will depend on personal factors such as creditworthiness and income, so it may vary from these averages.

Because mortgage rates can vary widely among lenders, it’s advisable to compare multiple offers regularly to secure the best refinancing deal tailored to your circumstances.

Use our Mortgage Calculator to estimate monthly payments across various loan scenarios and find the option that fits your budget.

What Influences Mortgage Rate Fluctuations?

Mortgage rates are shaped by a combination of macroeconomic and industry dynamics, including:

• Movements in the bond market, especially yields on 10-year Treasury notes
• The Federal Reserve’s monetary policies, particularly regarding bond purchases and government-backed mortgage funding
• Competitive forces among lenders and different loan products

Because multiple factors often change simultaneously, pinpointing a single cause for rate shifts can be challenging.

Throughout much of 2021, mortgage rates remained relatively low as the Federal Reserve purchased billions in bonds to support the economy amid the pandemic. This bond-buying strategy was a key driver in keeping borrowing costs down.

However, starting in November 2021, the Fed gradually tapered these purchases, ending them entirely by March 2022. Between then and July 2023, the Fed raised the federal funds rate aggressively to combat high inflation, increasing it by 5.25 percentage points over 16 months.

While the federal funds rate doesn’t directly set mortgage rates—and sometimes moves independently—the scale and speed of these hikes have indirectly pushed mortgage rates higher over the last two years.

Since July last year, the Fed has maintained the federal funds rate steady, announcing its eighth consecutive hold on July 31. Although inflation has eased, it remains above the Fed’s 2% target, prompting caution about reducing rates until inflation shows sustained decline.

The Federal Reserve has three more scheduled meetings this year, with the next concluding on September 18.

How We Monitor Mortgage Rates

The national and state average rates referenced here come from the Zillow Mortgage API, based on an 80% loan-to-value ratio (meaning a minimum 20% down payment) and a borrower credit score between 680 and 739. These averages reflect typical borrower experiences when obtaining lender quotes and may differ from advertised teaser rates. © Zillow, Inc., 2024. Use is subject to the Zillow Terms of Use.

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