Refinance Rates Climb: What It Means for Your Mortgage Today!
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Heads Up: We won’t be reporting daily mortgage rates on December 25 to celebrate Christmas. We’ll be back with fresh updates on December 26!
Just when you thought things couldn’t get more unpredictable, the 30-year refinancing rates took a sharp turn! After dipping slightly last Friday, they rose back up to an average of 7.12% on Monday, inching near a one-month peak. Remember September? That’s when these rates plummeted to a 19-month low of 6.01%. Now, in just a few short months, they’ve skyrocketed by over 1.1 percentage points, with mid-November even seeing rates touch 7.13%!
In the world of refinancing, not all loans are behaving the same. On Monday, the 15-year refinance rate crept up by a single basis point, while the 20-year option ticked up by 2 points. Meanwhile, jumbo 30-year refis saw a minor decrease of one basis point.
| National Averages of Lenders’ Best Refinance Rates | ||
|---|---|---|
| Loan Type | Refinance Rates | Daily Change |
| 30-Year Fixed | 7.12% | +0.02 |
| FHA 30-Year Fixed | 6.29% | No Change |
| VA 30-Year Fixed | 6.39% | +0.04 |
| 20-Year Fixed | 6.99% | +0.02 |
| 15-Year Fixed | 6.01% | +0.01 |
| FHA 15-Year Fixed | 6.09% | No Change |
| 10-Year Fixed | 6.35% | +0.30 |
| 7/6 ARM | 7.29% | -0.05 |
| 5/6 ARM | 6.89% | -0.08 |
| Jumbo 30-Year Fixed | 6.93% | -0.01 |
| Jumbo 15-Year Fixed | 6.59% | -0.08 |
| Jumbo 7/6 ARM | 7.08% | No Change |
| Jumbo 5/6 ARM | 7.53% | +0.17 |
Important
When you see rates advertised online, remember—they’re often teaser rates that only showcase the most attractive options. These rates may require upfront points or be based on hypothetical borrowers with top-tier credit. Your actual rate will depend on your unique financial profile, so it’s crucial to compare options!
With rates varying significantly across lenders, it’s always smart to shop around for your best mortgage refinance option. Do it regularly, no matter what kind of home loan you’re after!
Want to work out your monthly payments for different loan scenarios? Check out our Mortgage Calculator!
What Causes Mortgage Rates to Rise or Fall?
Mortgage rates are influenced by a variety of economic factors, including:
Identifying the cause of rate changes can be tricky since multiple factors often fluctuate simultaneously.
Throughout 2021, macroeconomic conditions kept mortgage rates relatively stable, largely due to the Federal Reserve purchasing massive amounts of bonds to counteract economic pressures from the pandemic. This bond-buying strategy plays a critical role in shaping mortgage rates.
Come November 2021, the Fed began tapering those bond purchases, leading to significant reductions every month until they hit zero in March 2022.
Fast forward to July 2023, the Fed had raised the federal funds rate aggressively to combat soaring inflation. Although it doesn’t directly dictate mortgage rates, its ripple effects are undeniable.
After almost 14 months at its peak, the Fed made a noteworthy move on September 18, announcing its first rate cut of 0.50 percentage points, followed by further adjustments in November and December.
However, the Fed indicated a cautious approach ahead, suggesting that rate cuts could slow due to persistent inflation concerns. This shift in outlook has caused 10-year Treasury yields to spike, which in turn has pushed mortgage rates up.
How We Track Mortgage Rates
The national and state averages mentioned earlier are sourced via the Zillow Mortgage API, based on an assumed loan-to-value ratio of 80% (meaning a minimum 20% down payment) and an applicant credit score ranging from 680 to 739. These figures provide a realistic expectation for borrowers when consulting lenders, differing from flashy teaser rates.
