Mortgage Refinance Rates Dip: What This Means for Your Wallet!
:max_bytes(150000):strip_icc()/GettyImages-1623129811-92862ea55817425cbfd2a061f58b6545.jpg?w=1500&resize=1500,1000&ssl=1 "Mortgage Refinance Rates Dip: What This Means for Your Wallet!")
Great news for homeowners looking to refinance! After hitting a peak that hadn’t been seen in nearly five months, the average rate for a 30-year refinance has dipped for the third consecutive day, landing at 7.08%. Just a month ago, these rates plummeted to a two-year low of 6.01%, but they’ve since bounced back over a full percentage point. It’s always a roller coaster ride in the mortgage market!
On the same day, the refinance rates for other loan types exhibited mixed movements, with several options experiencing minor reductions. For instance, the 15-year refinance average saw a decrease of 5 basis points, while 20-year rates dropped by 9 points. Jumbo 30-year refinance averages also went down by 9 basis points. It’s a good time to keep an eye on those numbers!
| National Averages of Lenders’ Best Rates – Refinance | ||
|---|---|---|
| Loan Type | Refinance Rates | Daily Change |
| 30-Year Fixed | 7.08% | -0.04 |
| FHA 30-Year Fixed | 6.29% | No Change |
| VA 30-Year Fixed | 6.38% | -0.06 |
| 20-Year Fixed | 6.94% | -0.09 |
| 15-Year Fixed | 6.04% | -0.05 |
| FHA 15-Year Fixed | 6.09% | No Change |
| 10-Year Fixed | 6.40% | +0.02 |
| 7/6 ARM | 7.18% | -0.07 |
| 5/6 ARM | 6.91% | +0.07 |
| Jumbo 30-Year Fixed | 6.78% | -0.09 |
| Jumbo 15-Year Fixed | 6.60% | -0.01 |
| Jumbo 7/6 ARM | 7.08% | No Change |
| Jumbo 5/6 ARM | 7.39% | -0.02 |
Important Note
The rates we showcase here differ from the flashy teaser rates you may encounter online, which are often handpicked to appear more attractive. Those rates might carry extra costs or be tailored to ideal borrowers with optimal credit. Your actual rate will hinge on several personal factors, so it’s crucial to consider these averages as starting points rather than guarantees.
Rates can vary widely among lenders, making it essential to shop around for the best mortgage refinance option. Regularly compare rates regardless of the type of loan you’re interested in!
Curious about what your monthly payments could look like? Use our Mortgage Calculator to explore different loan scenarios.
What Causes Mortgage Rates to Rise or Fall?
Mortgage rates are influenced by a whirlwind of macroeconomic and industry factors, including:
- The trend in the bond market, particularly the yields on 10-year Treasuries
- The Federal Reserve’s monetary policy, especially in relation to its bond purchases and government-backed mortgages
- Competition among mortgage lenders and across various loan types
These factors can change simultaneously, making it tricky to pinpoint exactly what drives shifts in mortgage rates.
For much of 2021, macroeconomic conditions kept mortgage rates relatively low, largely due to the Fed’s aggressive bond-buying strategy aimed at countering pandemic-induced economic challenges.
However, starting November 2021, the Fed began to scale back its bond purchases, ultimately tapering them to zero by March 2022. This shift was significant and set the stage for forthcoming rate changes.
From November 2021 to July 2023, the Fed raised the federal funds rate sharply to combat soaring inflation. While the fed funds rate doesn’t directly dictate mortgage rates, the recent hikes significantly influenced them.
The Fed has held the federal funds rate steady since July 2023 but recently hinted at rate cuts beginning with a 0.50 percentage point reduction on September 18, followed by smaller cuts later. Yet, the Fed also cautioned that future cuts may be less frequent due to persistent inflation, contributing to an uptick in 10-year Treasury yields and, consequently, mortgage rates.
How We Track Mortgage Rates
The national averages provided above are sourced from the Zillow Mortgage API, based on a standard loan-to-value (LTV) ratio of 80% (meaning at least a 20% down payment) and an applicant credit score between 680 and 739. These rates reflect what borrowers can expect to receive when shopping for lenders, potentially differing from the eye-catching teaser rates.
