Mortgage Refinance Rates Surge: Approaching a 5-Month Peak!
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Attention, homeowners! The rates for 30-year mortgage refinance loans have seen another uptick, rising by 3 basis points this Monday to reach an average of 7.15%. That’s just shy of the 7.19% peak we witnessed back on December 24, marking the highest point for 30-year refi rates since the summer months.
Can you believe it? Just a few months ago in September, refinance rates hit a two-year low of 6.01%. Fast forward, and they’ve surged by over a percentage point!
But hold on—it’s not just the 30-year loans seeing this trend! Other refinancing options are also on the rise. The average rate for 15-year refinances climbed by 6 basis points, while the 20-year loans increased by 5 points. Even the jumbo loans for 30-year refinancing ticked up a modest 3 basis points.
| National Averages of Lenders’ Best Rates – Refinance | ||
|---|---|---|
| Loan Type | Refinance Rates | Daily Change |
| 30-Year Fixed | 7.15% | +0.03 |
| FHA 30-Year Fixed | 6.29% | No Change |
| VA 30-Year Fixed | 6.45% | +0.05 |
| 20-Year Fixed | 7.08% | +0.05 |
| 15-Year Fixed | 6.10% | +0.06 |
| FHA 15-Year Fixed | 6.09% | No Change |
| 10-Year Fixed | 6.32% | +0.33 |
| 7/6 ARM | 7.31% | +0.01 |
| 5/6 ARM | 6.91% | No Change |
| Jumbo 30-Year Fixed | 6.89% | +0.03 |
| Jumbo 15-Year Fixed | 6.67% | +0.12 |
| Jumbo 7/6 ARM | 6.99% | -0.26 |
| Jumbo 5/6 ARM | 7.35% | -0.11 |
| Data sourced from mortgage lenders | ||
Important
Watch out for those eye-catching teaser rates! They often represent the best-case scenario, not what you’ll find in these averages. Teaser rates may require upfront points or be reserved for borrowers with squeaky-clean credit scores. Your final rate will hinge on multiple factors, including your credit standing, income, and more, so be sure to shop around!
Since rates can vary widely across lenders, it’s vital to explore multiple refinance options and keep comparing rates, regardless of the mortgage type you’re after.
Want to crunch some numbers? Use our handy Mortgage Calculator to estimate your monthly payments for different loan scenarios.
What Causes Mortgage Rates to Rise or Fall?
Ever wondered what makes mortgage rates tick? They’re influenced by a mix of macroeconomic trends and industry dynamics, such as:
- The performance of the bond market, particularly 10-year Treasury yields
- The Federal Reserve’s monetary policies, especially regarding bond purchasing and government mortgage funding
- Competition among mortgage lenders and across various loan types
With so many moving parts, pinpointing the exact cause of any rate change can be tricky!
Throughout 2021, macroeconomic factors kept mortgage rates relatively low as the Fed purchased billions in bonds to counter pandemic-related economic strain. This bond-buying policy has a significant effect on mortgage rates.
However, starting in November 2021, the Fed began tapering its bond purchases, reducing them significantly until hitting zero by March 2022.
From that point to July 2023, the Fed aggressively raised the federal funds rate in an effort to combat soaring inflation. While the fed funds rate doesn’t directly dictate mortgage rates, they can diverge, making the relationship complex.
But with the Fed’s rapid rate hikes, accumulating to 5.25 percentage points over 16 months, even indirect influences have sparked a notable rise in mortgage rates over the last couple of years.
The Fed held the federal funds rate steady at its peak for nearly 14 months until July 2023. On September 18, however, they announced a first rate cut of 0.50 percentage points, followed by additional quarter-point reductions on November 7 and December 18.
Yet, during its December meeting, the Fed’s policy committee warned that further rate cuts might be limited, projecting just two reductions in 2025 instead of the previously anticipated four. This revised outlook has led to an increase in 10-year Treasury yields, consequently pushing mortgage rates higher.
How We Track Mortgage Rates
The national and state averages mentioned above are sourced directly via mortgage data, assuming a loan-to-value (LTV) ratio of 80% (meaning a down payment of at least 20%) and a credit score within the 680–739 range. These figures represent what borrowers can generally expect when engaging with lenders for quotes. Keep in mind, these may differ from advertised teaser rates.
