Refinance rates fall for homeowners: Today’s refinance rates, September 24, 2024

Now that the Federal Reserve has officially begun lowering interest rates, homeowners can expect mortgage refinancing rates to gradually decline. Over the past two years, rising mortgage rates have made refinancing out of the question for most homeowners, as the vast majority currently have mortgage rates below 6%.

Now that interest rates have started to fall, refinancing activity is slowly increasing. The lower the mortgage rate, the more homeowners benefit financially from refinancing their mortgage loans. For more information on weekly mortgage forecasts, see here.

The Federal Reserve is starting to cut interest rates, and mortgage rates are already lower. Get the best rate for your situation by comparing multiple loan offers from different lenders. Get a customized quote from one of CNET’s partner lenders by entering your information below.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool includes partner rates from lenders that you can use when comparing multiple mortgage rates.

Current trends in refinancing rates

With inflation cooling and the Fed moving to cut interest rates, mortgage refinance rates have fallen significantly. In fact, even before the central bank cut interest rates by 0.5% on September 18, mortgage rates had begun to fall, with average mortgage rates now close to 6.2%.

In a press conference After the central bank’s September policy meeting, Fed Chairman Jerome Powell said lower mortgage rates would help thaw the housing market, which had been frozen by the so-called “rate-lock” effect. Homeowners who were able to lock in cheap mortgage rates before 2022 were reluctant to refinance or sell their homes because they would end up with more expensive mortgage rates.

Still, those who bought a home when mortgage rates were at their peak (particularly when rates rose above 8% late last year) can already benefit from savings on their monthly payment by refinancing. As mortgage rates fall toward the mid-5% range, the fixed-rate effect should diminish and more homeowners will be able to enter the market.

Refinancing rate forecast for 2024

While a single 0.5% rate cut will not lead to a similar drop in mortgage rates, it does offer a glimmer of hope in a difficult housing market.

It’s impossible to predict exactly where mortgage rates will end up, because so much depends on economic data we don’t yet have. But with the Fed predicting additional cuts this year, there’s still some room to go lower.

Most forecasts indicate that the 30-year fixed mortgage rate will be around 6% by the end of the year. Later in the year, we could see mortgage rates fall to the mid-5% range. Much depends on how quickly and by how much the Fed cuts rates, as well as other factors, such as how the labor market performs in the coming months.

Remember, refinancing your mortgage isn’t free. Because you’re taking out a brand new mortgage, you’ll have to pay additional closing costs. If you’re one of those homeowners who bought a home when interest rates were high, consider calling your lender and crunching the numbers to see if refinancing your mortgage makes sense for your budget, he said. Logan MohtashamiChief Analyst at HousingWire.

What does refinancing entail?

When you refinance your mortgage, you take out another mortgage that pays off your original mortgage. With traditional refinancing, your new mortgage has a different term and/or interest rate. With cash-out refinancing, you tap into your home equity with a new loan that is larger than your existing mortgage balance, allowing you to pocket the difference in cash.

Refinancing can be a great financial move if you get a low interest rate or can pay off your mortgage in less time, but consider whether it’s right for you. Lowering your interest rate by 1% or more is an incentive to refinance, which can significantly reduce your monthly payment.

Choosing the right refinancing type and term

The rates advertised online often require specific conditions to qualify. Your personal interest rate is affected by market conditions and your specific credit history, financial profile, and application. A high credit score, low credit utilization ratio, and a history of consistent and timely payments will generally help you get the best interest rates.

30-year fixed rate refinancing

For a 30-year fixed refinance, the average rate is currently 6.15%, down 19 basis points from a week ago. (A basis point is equal to 0.01%). A 30-year fixed refinance typically has lower monthly payments than a 15- or 10-year fixed refinance, but the loan takes longer to pay off and the interest charges are typically higher in the long run.

15-year fixed rate refinancing

For 15-year fixed refinances, the average rate is currently 5.55%, down 27 basis points from what we saw last week. While a 15-year fixed refinance will likely increase your monthly payment compared to a 30-year loan, you’ll save more money over time because you’ll pay off your loan faster. Additionally, 15-year refinance rates are typically lower than 30-year refinance rates, which will help you save more in the long run.

10-year fixed rate refinancing

The current average rate for a 10-year refinance is 5.55%, down 39 basis points from last week. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all refinance terms. A 10-year refinance can help you pay off your home much faster and save on interest, but make sure you can afford the higher monthly payment.

To get the best refinance rates, make your application as strong as possible by getting your finances in order, being responsible with credit, and monitoring your credit regularly. And don’t forget to talk to multiple lenders and shop around.

Reasons to refinance

Homeowners usually refinance to save money, but there are other reasons to do so as well. Here are the most common reasons why homeowners refinance:

• To get a lower interest rate: If you can get an interest rate that is at least 1% lower than the interest rate on your current mortgage, it may make sense to refinance.
• To change mortgage type: If you have a variable interest rate mortgage and want more security, you can transfer your mortgage to a fixed interest rate mortgage.
• To cancel mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance it to a conventional loan once you have 20% equity.
• To change the term of a loan: Refinancing to a longer term can lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
• To access your equity through a cash-out refinance: If you replace your mortgage with a larger loan, you can receive the difference in cash to cover a large expense.
• Taking someone off the mortgage: In the event of a divorce, you can apply for a new mortgage in your own name and use the money to pay off your existing mortgage.