Mortgage Refinance Rates Remain at 18-Month Lows
Explore how 30-year mortgage refinance rates have stabilized at their lowest averages since early 2023, while other refinance loan rates experience slight shifts. Stay informed on what influences mortgage rate changes and how to find the best refinance options.
Mortgage refinance rates for 30-year loans held steady on Tuesday, maintaining an average of 6.51%, marking the lowest point since February 9, 2023. This stability offers potential savings for homeowners looking to refinance.
While most refinance rates showed minimal movement, the 15-year refinance average inched up by 6 basis points. Conversely, jumbo 30-year refinance loans saw a slight decrease, dropping by 5 basis points.
Key Insights
The rates presented here differ from promotional teaser rates often advertised online. Those teaser rates are typically the most favorable offers and may require upfront points payment or assume ideal borrower profiles, such as very high credit scores or smaller loan amounts. Your actual refinance rate will depend on personal factors including creditworthiness and income.
Because mortgage rates can vary significantly between lenders, it’s crucial to shop around and compare offers regularly to secure the best refinance deal regardless of your loan type.
Utilize our Mortgage Calculator to estimate monthly payments under various loan scenarios.
What Drives Mortgage Rate Fluctuations?
Mortgage rates are influenced by a complex mix of economic and industry factors, including:
- Movements in the bond market, particularly 10-year Treasury yields
- The Federal Reserve’s monetary policies, especially regarding bond purchases and government-backed mortgage funding
- Competitive dynamics among mortgage lenders and loan products
Since multiple factors often interact simultaneously, pinpointing a single cause for rate changes is challenging.
In 2021, mortgage rates remained relatively low due to the Federal Reserve's extensive bond-buying programs aimed at mitigating pandemic-related economic challenges. This policy strongly impacts mortgage rates.
However, starting November 2021, the Fed began tapering bond purchases, ceasing them by March 2022. Between then and July 2023, the Fed raised the federal funds rate aggressively to combat high inflation, indirectly influencing mortgage rates despite their potential to move independently.
The Fed increased the benchmark rate by 5.25 percentage points over 16 months, significantly contributing to higher mortgage rates during this period.
Since last July, the Fed has held rates steady, announcing its eighth consecutive hold on July 31. Although inflation has decreased, it remains above the Fed’s 2% target, prompting caution before any rate cuts.
The Fed has three more scheduled meetings this year, with the next concluding on September 18.
How We Monitor Mortgage Rates
The national and state mortgage rate averages referenced here are sourced from the Zillow Mortgage API, based on an 80% loan-to-value ratio (20% down payment) and credit scores between 680 and 739. These averages reflect realistic borrower expectations and may differ from advertised teaser rates. © Zillow, Inc., 2024. Use subject to Zillow Terms of Use.
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