Mortgage Refinance Rates on Jan. 23, 2024: Rates Tick Higher (2024)

Both 15-year fixed and 30-year fixed refinances saw their average rates climb this week. The average rates for 10-year fixed refinances also moved up.

30-year fixed refinance: 6.98%
15-year fixed refinance: 6.38%
10-year fixed refinance: 6.20%

Refinance rates remain relatively high, and millions of homeowners are keeping their original mortgages until rates ease more. Though home loan rates have been dipping since November, current rates are still well above the 3.5% average on existing mortgages, according to Mark Zandi, chief economist at Moody’s Analytics. And, although refinancing activity has picked up recently, the overall level of refinance applications is still very low compared to early 2021. “Rates will need to fall substantially more for refi activity to meaningfully increase,” said Zandi.

With the Federal Reserve taking its third consecutive pause from its aggressive rate-hike policy and promising interest rate cuts throughout this year, the opportunity to refinance might come sooner rather than later.

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

Refinance rates for homeowners

In today’s high-rate environment, refinancing is less attractive. Rates are currently between 6% and 7%, but your personal interest rate will depend on your credit history, financial profile and application.

Here are the average refinance rates reported by lenders nationwide. We track refinance rate trends using data collected by Bankrate:

Today’s refinance rates

Product	Rate	A week ago	Change
30-year fixed refi	7.14%	7.10%	+0.04
15-year fixed refi	6.38%	6.24%	+0.14
10-year fixed refi	6.20%	6.10%	+0.10

Rates as of Jan. 23, 2024

What does it mean to refinance?

When you refinance your mortgage, you take out another home loan that pays off your initial mortgage. With a traditional refinance, your new home loan will have a different term and/or interest rate. With a cash-out refinance, you’ll tap into your equity with a new loan that’s bigger than your existing mortgage balance, allowing you to pocket the difference in cash.

Refinancing can be a great financial move if you score a low rate or can pay off your home loan in less time, but consider whether it’s the right choice for you. Reducing your interest rate by 1% or more is an incentive to refinance, allowing you to cut your monthly payment significantly. But today’s mortgage market conditions aren’t ideal. If you decide to refinance, compare rates, fees and the annual percentage rate -- which reflects the total cost of borrowing -- from different lenders to find the best deal.

30-year fixed-rate refinance

The current average interest rate for a 30-year refinance is 7.14%, an increase of 4 basis points from what we saw one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance, but it will take you longer to pay off and typically cost you more in interest over the long term.

15-year fixed-rate refinance

The current average interest rate for 15-year refinances is 6.38%, an increase of 14 basis points from what we saw the previous week. Though a 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan, you’ll save more money over time because you’re paying off your loan quicker. Also, 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 refinance

The average rate for a 10-year fixed refinance loan is currently 6.20%, an increase of 10 basis points compared to one week ago. 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 house much quicker and save on interest, but make sure you can afford the steeper monthly payment.

Where will refinance rates end up?

When mortgage rates hit historic lows during the pandemic, there was a refinancing boom, as homeowners nabbed lower interest rates on their home loans. But refinancing might not actually save you money right now. “Refinancing for some people will make sense if they have rates above 8%,” said Logan Mohtashami, lead analyst at HousingWire. “However, with all refinancing options, it’s a personal financial choice because of the cost that goes with the loan process,” Mohtashami said.

If economic data goes in the right direction, 2024 should lead to lower rates. “The best bet there is to keep an eye on day-to-day rate changes and have a game plan on how to capitalize on a big enough drop,” said Matt Graham of Mortgage News Daily.

When should I refinance?

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

To get a lower interest rate: If you can secure a rate that’s at least 1% lower than the one on your current mortgage, it could make sense to refinance.
To switch the type of mortgage: If you have an adjustable-rate mortgage and want greater security, you could refinance to a fixed-rate mortgage.
To eliminate mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance to a conventional loan once you have 20% equity.
To change the length of a loan term: Refinancing to a longer loan term could lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
To tap into 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.
To take someone off the mortgage: In case of divorce, you can apply for a new home loan in just your name and use the funds to pay off your existing mortgage.

How to shop for refinance rates

The rates advertised online often require specific conditions for eligibility. Your personal interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application. Having a high credit score, a low credit utilization ratio and a history of consistent and on-time payments will generally help you get the best interest rates. To get the best refinance rates, make your application as strong as possible by getting your finances in order, using credit responsibly and monitoring your credit regularly. And don’t forget to speak with multiple lenders and shop around.

1. Current Refinance Rates:

The article mentions the average refinance rates for three different terms:

30-year fixed refinance: 7.14%
15-year fixed refinance: 6.38%
10-year fixed refinance: 6.20%

These rates are reported by lenders nationwide as of January 23, 2024.

2. Market Overview:

Refinance rates remain relatively high, ranging between 6% and 7%.
Despite a dip in home loan rates since November, they are still above the 3.5% average on existing mortgages.
Mark Zandi, chief economist at Moody’s Analytics, suggests that rates need to fall substantially for a meaningful increase in refinancing activity.

3. Federal Reserve's Influence:

The Federal Reserve has paused its aggressive rate-hike policy and is considering interest rate cuts throughout the year.
This could create an opportunity for homeowners to refinance sooner rather than later.

4. Historical Context:

During the pandemic, historic lows in mortgage rates led to a refinancing boom.
However, the article emphasizes that refinancing might not save money for everyone at present rates.

5. Factors Affecting Refinance Rates:

Personal interest rates depend on credit history, financial profile, and application.
High credit scores, low credit utilization ratios, and a history of consistent, on-time payments generally result in better interest rates.

6. Reasons to Refinance:

To get a lower interest rate (at least 1% lower than the current mortgage rate).
To switch from an adjustable-rate mortgage to a fixed-rate mortgage for greater security.
To eliminate mortgage insurance once 20% equity is reached.
To change the length of the loan term, either to lower monthly payments or save on long-term interest.
To tap into equity through a cash-out refinance for significant expenses.
To remove someone from the mortgage in case of divorce.

7. Considerations for Refinancing:

Refinancing is less attractive in the current high-rate environment.
Reducing interest rates by 1% or more is a significant incentive to refinance.
When considering refinancing, it is crucial to compare rates, fees, and the annual percentage rate (APR) from different lenders.

8. Future Rate Predictions:

If economic data improves, 2024 may lead to lower rates.
Monitoring day-to-day rate changes and having a strategy to capitalize on significant drops is advised.

9. How to Shop for Refinance Rates:

Rates advertised online may have specific eligibility conditions.
Strengthening your application with a high credit score, responsible credit utilization, and consistent, on-time payments can help secure better rates.
Speaking with multiple lenders and shopping around is recommended to find the best refinance deal.

In conclusion, the presented information covers the current state of refinance rates, market dynamics, the impact of the Federal Reserve, historical context, factors affecting personal interest rates, reasons to refinance, considerations, and future rate predictions. Homeowners are advised to carefully assess their individual situations before deciding on refinancing, considering the broader economic context and potential benefits.