Refinance Rates Today: December 23, 2024
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The current average refinance rate on a 30-year, fixed-rate home loan is 6.04%, according to data from Zillow. If you’re a homeowner hoping to refinance your mortgage for a lower rate or to tap home equity, read on to see average refi interest rates for a variety of loan types and terms.
Current refi rates data
Fortune reviewed the most recent Zillow data available as of Dec. 23.
how mortgage refinancing works
Mortgage refinancing involves paying off your existing home loan with a new one. Similar to your initial mortgage submission, you’ll need to apply for the refinance loan and meet lender criteria regarding your credit profile, proof of income, your debt-to-income (DTI) ratio, and more.
This process generally results in a small hit to your credit score due to the hard inquiry. be aware there’s a risk of denial if you don’t meet the lender’s requirements.
What’s happening with mortgage rates in today’s market?
Some observers anticipated mortgage interest rates would fall alongside the Federal Reserve’s cuts to the federal funds rate late last year.However, rates remained near 7% for months.
Rates dropped slightly toward the end of february, moving closer to 6.5%. Still, rates remain elevated above pandemic-era lows, when some homeowners secured mortgages with rates in the 2% and 3% range.
A Redfin report showed that as of the third quarter of 2024, 82.8% of homeowners with a mortgage had an interest rate under 6%. Many Americans felt locked in, unwilling or unable to move or refinance while rates remained high.
There was some relief leading up to the Fed’s meetings in September and October, with rates trending downward ahead of the September meeting and inching downward leading into the October meeting. The central bank cut the federal funds rate at both meetings, with a quarter percentage point reduction each time-and made a third cut of the same amount in December.
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When it makes sense to refinance
Refinancing isn’t always the right move. Consider refinancing if:
- You can secure a lower interest rate: This is the most common reason to refinance.
- You want to shorten your loan term: Switching from a 30-year to a 15-year mortgage can save you money on interest and build equity faster.
- You need to tap into your home equity: A cash-out refinance allows you to borrow against your home equity for expenses like home improvements or debt consolidation.
However, factor in closing costs, which can range from 2% to 5% of the loan amount. Make sure the savings from refinancing outweigh these costs.