Federal funds rate

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Yes, you can refinance student loans with a private lender more than once in the quest for a lower interest rate and different repayment term.

How Many Times Can You Refinance Student Loans?

If you’re a graduate who has the credit score and income to qualify, you can refinance your student loans as many times as you’d like. In fact, some folks refinance multiple times.

But before you get too refi-happy, it’s important to know the advantages and disadvantages of this strategy.

What Are Some Advantages of Refinancing Multiple Times?

One of the biggest advantages of refinancing your student loans is that you may be able to qualify for a lower interest rate, whether you refinance once or several times. A reduced rate can help you save money in the long run.

For example, let’s say you’ve been paying down an older federal Grad PLUS loan that currently has a balance of $40,000 and an interest rate of 7.90%. You have 10 years of payments left, which are currently $483.20 per month.

You have good credit and qualify for a seven-year, fixed refinance rate of 6%. If you were to go through with the refinance, you’d actually increase your monthly payment by about $100. However, you’d save about $8,900 in total interest.

Later on, you might qualify for a lower fixed rate or an even lower variable rate, and so on.

Or you might find it helpful to refinance to a longer term, with lower monthly payments. That will likely mean paying more in interest over the life of the loan, but lower monthly payments may put you in a better position to accomplish your short-term financial goals.

Reputable lenders charge no application or origination fees, so refinancing each time will not cost you anything.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Are Some Disadvantages of Refinancing Multiple Times?

One disadvantage of refinancing your student loans is that your credit score could temporarily drop by a few points. Whenever you apply for a loan, the lender performs a hard credit inquiry. One or two inquiries usually have a small and temporary impact on your score. However, too many hard inquiries within a short time frame could cause some damage. The good news is that many student loan refinancing lenders allow you to shop for rates and get quotes online using a soft credit pull, which has no impact on your score.

Another factor to consider is your time. Though you can refinance as many times as you want, it helps to make sure it’s worth the effort. That means researching reputable lenders and the rates and terms they offer.

It’s important to point out that refinancing federal student loans even once will cause you to permanently forfeit government-backed protections and benefits, such as federal student loan forgiveness programs, deferment, and forbearance.

How Is Student Loan Refinancing Different Than Consolidation?

It’s important to make a distinction between refinancing and consolidation. When you refinance your student loans with a private lender, you are borrowing one new loan with new terms, such as a lower interest rate or different repayment term, and using the proceeds to pay off your existing loans.

When you consolidate federal student loans into a Direct Consolidation Loan, you combine your existing loans into one. The term may be drawn out to up to 30 years, and the interest rate will be the weighted average of the original loans’ rates, rounded up to the nearest eighth of a percentage point. For this reason, your new rate may actually be higher than the rate of your previous lowest-interest loan.

Things to Look for When Refinancing

Whether you refinance your student loans for the first or sixth time, it would be smart to check that your new rate and term make sense for you.

You’ll encounter fixed-rate and variable-rate loans. Fixed-rate loans have one set interest rate that does not change over the life of the loan. The rates on fixed-rate student loans are typically higher than the initial rates of variable-rate loans. However, because the rate never changes, it can make budgeting easier.

Variable-rate loans have interest rates that start off lower, but can fluctuate based on the prime rate or another index. Rates can climb if the rate or index they are tied to goes up (and vice versa).

Variable-rate loans might be a good choice for shorter-term loans. The longer the loan term, the bigger the chance of a rate hike.

Also, beware of qualifying for a low interest rate that’s attached to a longer-term loan. Though monthly payments might be low, a longer term might mean you’ll end up paying much more in interest over the life of the loan. If you can afford the higher monthly payment, loans with shorter terms can be a good cost-saving option.

Consider looking for a refinance lender that offers competitive rates and flexibility in choosing the repayment term. And if you want to refinance both federal and private student loans into one new loan, look for a lender that does that.

Serious savings. You could save thousands of dollars.
We offer flexible terms and low fixed or variable rates.

Refinancing Your Student Loans More Than Once

It’s all about the great rate chase.

Having a low debt-to-income ratio can help you qualify for a lower interest rate. So if you have a higher salary, get a big bonus, or pay off other debts, your debt-to-income ratio might improve.

Similarly, if your credit score increases, you typically become more attractive to lenders. This could happen if you are using a small amount of your available credit, or if you find and correct a mistake on one of your credit reports. (Do student loans affect your credit score? Continuous on-time payments may have a positive effect.)

Married couples may want to consider refinancing student loans together to put the power of two earners to use. A solid cosigner could also be brought aboard.

If you’re thinking about a refinance, it could help to keep an eye on the federal funds rate, which is the rate banks charge one another for overnight loans. When the Federal Reserve raises or lowers short-term interest rates, private lenders respond in turn. (This does not apply to federal student loans, whose interest rates have been set by Congress once a year since 2006.)

Even if interest rates rise now, they could still be considered low by historical standards.

Refinancing Your Student Loans With SoFi

Is it bad to refinance multiple times? If it saves you money, that’s nothing but a good thing. Refinancing won’t be the right move for all people, but everyone should know the rates they’re paying, their total student debt load, and their repayment strategy.

SoFi is a leader in refinancing student loans, with low fixed or variable rates and flexible loan terms.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Can I consolidate student loans more than once?

You can consolidate federal student loans into a Direct Consolidation Loan more than once only if you have federal loans that were not included in a previous consolidation, or if you previously consolidated loans under the Federal Family Education Loan (FFEL) consolidation program. Remember that consolidation does not lower your loan rate.

How many times can you refinance a loan?

As many times as you qualify to do so.

How many times can you take out student loans?

When it comes to federal student loans, there is no time limit on how long a borrower can receive Direct Unsubsidized Loans or Direct PLUS loans, but annual and aggregate limits for Direct Unsubsidized Loans apply.

Private student loans, for which you must qualify or have a cosigner, usually have an annual limit equal to an institution’s cost of attendance minus other financial aid. Most have aggregate loan limits for undergraduate and graduate students.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

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A couple of closely followed mortgage rates sank over the last seven days. Average 15-year fixed mortgage rates climbed, while average 30-year fixed mortgage rates shrank, while The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, decreased.

As inflation surged in 2022, so too did mortgage rates. To rein in price growth, the Federal Reserve began bumping up its federal funds rate — a short-term interest rate that determines what banks charge each other to borrow money. By making it more expensive to borrow, the central bank’s goal is to reduce prices by curtailing consumer spending.

During its July 26 meeting, the Fed initiated a 25-basis point (or 0.25%) hike to its federal funds rate, marking its 11th increase in the current rate hiking cycle. The most recent increase could have an impact on mortgage rates, but experts say the markets may have already factored it into rates.

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.

“Mortgage rates will continue to ebb and flow week to week, but ultimately, I think rates will stick to that 6% to 7% range we’re seeing now,” said Jacob Channel, senior economist at loan marketplace LendingTree.

The Fed doesn’t set mortgage rates directly, but it does play an influential role. Mortgage rates move around on a daily basis in response to a range of economic factors, including inflation, employment and the broader outlook for the economy. A lower inflation rate is good news for mortgage rates, but the potential for additional hikes from the central bank this year will keep upward pressure on already high rates.

Rather than worrying about mortgage rates, though, homebuyers should focus on what they can control: getting the best rate they can for their financial situation.

To increase your odds at qualifying for the lowest rate available, take the steps necessary to improve your credit score and to save for a down payment. Also, be sure to compare the rates and fees from multiple lenders to get the best deal. Looking at the annual percentage rate, or APR, will show you the total cost of borrowing and help you make an apples-to-apples comparison among lenders.

30-year fixed-rate mortgages

The average 30-year fixed mortgage interest rate is 7.55%, which is a decrease of 1 basis point from seven days ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will usually have a greater interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.80%, which is an increase of 1 basis point from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. However, as long as you’re able to afford the monthly payments, there are several benefits to a 15-year loan. These include typically being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 6.53%, a downtick of 3 basis points compared to a week ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. But changes in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. For borrowers who plan to sell or refinance their house before the rate changes, an adjustable-rate mortgage could be a good option. Otherwise, changes in the market mean your interest rate may be significantly higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021, but increased steadily throughout 2022 as the Federal Reserve began aggressively hiking interest rates. Now, mortgage rates are well above where they were a year ago. What does this mean for homebuyers this year?

“Mortgage rates have hovered in the 6% to 7% range for the past 10 months. Though home prices have softened slightly nationally, the still-high cost of borrowing means hopeful home buyers have felt little relief,” said Hannah Jones, economic research analyst at Realtor.com.

However, if inflation continues to decline and the Fed is able to hold rates where they are and eventually cut them, mortgage rates are likely to decrease slightly in 2023. However, they’re highly unlikely to return to the rock-bottom levels of just a few years ago.

The most recent housing forecast from Fannie Mae calls for the average 30-year fixed mortgage rate to close out the year at around 6.6%.

“Mortgage rates have been volatile for some time now and while they could eventually start trending down over the next six months to a year as inflation growth continues to cool, their path is probably going to be bumpy,” Channel said.

We use information collected by Bankrate to track changes in these daily rates. This table summarizes the average rates offered by lenders across the US:

Today’s mortgage interest rates

Loan term Today’s Rate Last week Change
30-year mortgage rate 7.55% 7.56% -0.01
15-year fixed rate 6.80% 6.79% +0.01
30-year jumbo mortgage rate 7.58% 7.58% N/C
30-year mortgage refinance rate 7.73% 7.75% -0.02

Rates as of Sept. 18, 2023.

How to find personalized mortgage rates

To find a personalized mortgage rate, speak to your local mortgage broker or use an online mortgage service. Make sure to take into account your current finances and your goals when trying to find a mortgage.

Specific mortgage interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Generally, you want a good credit score, a higher down payment, a lower DTI and a lower LTV to get a lower interest rate.

The interest rate isn’t the only factor that affects the cost of your home. Be sure to also consider additional factors such as fees, closing costs, taxes and discount points. Make sure you speak with a variety of lenders — like local and national banks, credit unions and online lenders — and comparison shop to find the best mortgage loan for you.

What is a good loan term?

One important consideration when choosing a mortgage is the loan term, or payment schedule. The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are fixed for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only the same for a certain amount of time (commonly five, seven or 10 years). After that, the rate changes annually based on the current interest rate in the market.

One thing to think about when choosing between a fixed-rate and adjustable-rate mortgage is the length of time you plan on living in your home. For people who plan on living long-term in a new house, fixed-rate mortgages may be the better option. While adjustable-rate mortgages might have lower interest rates upfront, fixed-rate mortgages are more stable over time. If you aren’t planning to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. There is no best loan term as a general rule; it all depends on your goals and your current financial situation. Be sure to do your research and know what’s most important to you when choosing a mortgage.

Source: cnet.com

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Apache is functioning normally

Apache is functioning normally

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The housing market will remain subdued until the Federal Reserve starts cutting rates next year, according to economists and housing pros following the central bank’s Wednesday announcement to leave the benchmark rate unchanged in the target range of 5.25%-5.5%.

Until interest rates come down, affordability challenges will continue to put first-time buyers on the sidelines, housing industry observers said. Real estate experts reiterated caution against further rate increases. 

While Fed Chair Jerome Powell emphasized incoming data will determine whether the central bank will raise its federal funds rate at its next FOMC meeting in November, the “dot-plot” of rate projections showed policymakers foresee one more hike by the year-end. The bulk of central bank officials expect to have interest rates finishing the year at around 5.6%.

In an elevated rate environment, the lack of inventory continues to be the biggest challenge for many potential buyers, the Mortgage Bankers Association said. 

“While homebuilder sentiment is clearly impacted by the recent surge in mortgage rates, permits for single-family homes provide a positive outlook for the pace of construction in the year ahead. If mortgage rates trend down in 2024 as we anticipate, the combination of more homes for sale and somewhat lower rates should support stronger purchase volume,” Mike Fratantoni, SVP and chief economist at the MBA.

The MBA expects mortgage rates should begin to reflect that the Fed’s moves in 2024 will be cuts – not further increases. MBA’s mortgage finance forecast projected the 30-year fixed mortgage rate to decline to 5.4% in 2024 and 5.1% in 2025.

Powell also noted in a press conference that because people locked in “very low rate mortgages, even if they want to move now, that would be hard because the new mortgage would be so expensive.”

Rates are most likely to stay elevated until 2024, said Danielle Hale, chief economist at Realtor.com, thus putting a damper on the number of home sales transactions.

“Higher mortgage rates have radically altered homebuyer purchasing power and have been a key factor in existing home sales dropping from a more than 6.5 million unit pace in early 2022  to the roughly 4 million unit pace in recent months,” Hale said. 

More importantly, higher mortgage rates continue to keep existing homeowners sidelined, with as many as one in seven buyers out of the market because they don’t want to borrow at today’s much higher rates, Hale noted. 

Short-term mortgage rate movement

In the short-term, mortgage rates are likely to bounce around a bit as the markets digest upcoming economic data, Melissa Cohn, regional vice president of William Raveis Mortgage, said. 

Incoming data of job and CPI reports next month will provide more clarity on how strong the economy is. Reports on jobs and inflation will be released on October 6 and October 12, respectively. 

“If the data reveals that inflation remains elevated and employment is still growing, then mortgage rates are likely to move up and we can look for what we hope to be the last rate hike of this cycle,” Cohn said.

The rapid ascent is mostly behind us but it will be a while before the economy sees any sign of a gradual descent, Marty Green, principal at mortgage law firm Polunsky Beitel Green, added.

“In my view, this means the mortgage interest rate environment will continue to bounce sideways through the next several months,” Green said.

Mortgage rates have been on an upward trend this year with rates in August surging to 7.23%—the highest since 2001.

Fed officials expect interest rates to be at 5.1% in 2024, up from the 4.6% projected in June. Officials expect fewer cuts in 2025 with the median estimate for the benchmark rate to be at 3.9%, up from 3.4%. 

The committee raised its projections for growth, and is looking for a better-than-expected labor market as well, with the jobless rate peaking at 4.1%, rather than 4.5%.

Pushback against further rate increases

With two more scheduled FOMC meetings in November and December, housing experts cautioned against further rate increases.

The Fed must consider the potential economic damage arising from any future rate hikes, Lawrence Yun, chief economist at National Association of Realtors, reiterated his position. 

“Commercial real estate has come under stress from higher interest rates, which will further negatively impact community banks due to their large exposure to the sector. Therefore, the Fed needs to wait and not raise rates. Possible interest rate cuts then need to be considered once inflation is fully under control,” Yun said.

Overall data point to an accelerating slowdown but continues to be mixed because of some lagging indicators, Green noted.

Unemployment rates and the CPI component lags measures of market rents by around a year.

“With rates elevated into restrictive territory, I expect the Fed to be patient and hold off on any additional increases until it becomes clearer that an additional rate hike is warranted,” Green said. 

Source: housingwire.com

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Apache is functioning normally

Posted on: September 18, 2023

The Federal Open Market Committee’s next meeting is scheduled for September 19, 2023. A policy update, which will include any rate adjustments, is expected to be announced on September 20. As the next meeting date approaches, all eyes are on the decision-makers at the Federal Reserve.

Let’s explore what experts expect in the coming meeting and what that could mean for home buyers.

Check your VA home buying eligibility. Start here (Sep 18th, 2023)

What the experts expect

The CME FedWatch Tool, a tool investors use to predict Fed policy changes, indicates that there is over a 90% chance that the Fed will keep interest rates the same at the meeting later this month. As of September 6, there’s less than a 10% chance the Fed will increase the federal funds rate.

Although this tool is helpful, it’s not a foolproof estimation. In August, Jerome H. Powell, chair of the Federal Reserve, made a speech at the Jackson Hole Symposium. Powell kicked things off by saying, “It is the Fed’s job to bring inflation down to our 2 percent goal, and we will do so. We have tightened policy significantly over the past year. Although inflation has moved down from its peak — a welcome development — it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

It’s impossible to know what will ultimately come out of the FOMC meeting. But many expect rates to stand where they are.

Could mortgage rates fall?

Mortgage interest rates have been on the rise since March 2022. Until that point, American home buyers were enjoying historically low interest rates on home loans. But that all changed when interest rates started climbing.

Since March 2022, mortgage interest rates have increased dramatically. From an average of 3.76% on 30-year fixed-rate loans in March 2022, rates are currently sitting at 7.18% for the same loan type. Rising rates mean more expensive loan options for prospective homeowners. In some households, higher interest rates have put a home purchase out of reach.

If the Federal Reserve pauses its ongoing battle against inflation, interest rates will remain steady at the upcoming meeting. For potential home buyers, this pause will allow mortgage rates to remain where they are for now. The interest rate stability could be a game-changer for anyone looking to buy a home.

Beyond holding rates steady, some experts foresee a pause in interest rate hikes, leading to a drop in home loan interest rates. More stability in the market could allow lenders to offer slightly lower rates for home buyers.

Check your VA mortgage rates. Start here (Sep 18th, 2023)

What this means for you

If you are looking to take out a loan of any kind, a pause on interest rate hikes is a welcome reprieve. At the very least, you won’t face any higher interest rates. But in the best-case scenario, you can take advantage of the market’s temporary stability to lock in a slightly lower interest rate.

For anyone looking to purchase a home, a pause in rate hikes could be the signal that the cooling housing market has been waiting for. Any dip in mortgage rates could reignite the hot market conditions that persisted throughout 2021.

If you want to make a mortgage move, by either purchasing a new house or refinancing your current mortgage loan, a pause on interest rate hikes might be the appropriate time to act on your plans.

Future rate hikes

If the Federal Reserve doesn’t increase interest rates at the upcoming meeting, it will mark a big change. We’ve been seeing rates climb for over a year. A pause to higher rates would be a welcome reprieve.

Of course, we can only wait to see what the Fed will do at the next meeting. But even if interest rate hikes are paused for this meeting, it’s possible rate hikes will continue at the next meeting. After all, Powell’s recent speech made it clear that taming inflation is still the top priority for the Federal Reserve.

If you are planning to take out a home loan in the near future, keeping an eye on the changing interest rate market could make a big difference. A higher interest rate could eat into your home purchase budget, which means locking in the lowest possible rate is critical.

Check your VA home buying eligibility. Start here (Sep 18th, 2023)

Source: militaryvaloan.com

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climbed to a 22-year high earlier this week.

Zillow debuted its 1% down payment program on Thursday, agreeing to contribute an additional 2% at closing in an effort to “reduce the time eligible homebuyers need to save [money],” the real estate marketplace said in a statement.

“Most markets are in the midst of an affordability crisis, and saving for a down payment remains one of the biggest barriers for many potential homebuyers,” Zillow said — the same day mortgage rates in America hit their highest level since 2001.

Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan climbed to 7.23% from 7.09% last week — significantly higher than just one year ago, when the rate averaged 5.55%, and more than double what it was two years ago.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, rose to 6.55% from 6.46% last week. A year ago, it averaged 4.85%, Freddie Mac said.

It’s the fifth consecutive weekly increase for the average rate, which is now at its highest level since early June 2001, when it averaged 7.24%.

Zillow announced that it’s offering mortgages with a 1% down payment to US homebuyers who are being squeezed by mortgage rates that are more than double what they were just two years ago and their highest level since 2001.
AFP via Getty Images

Zillow’s 1% program could also be a way to win back business after two years of declining sales. The company’s now-shuttered home-flipping business, Zillow Offers, lost a staggering $881 million in 2021.

For the entire fiscal year, the company posted a net loss of $528 million and laid off about 2,000 staffers, roughly 25% of its workforce. In 2022, Zillow reported $101 million in net losses and $1.95 billion in annual revenue — an over 8% dip from the previous year.

already unaffordable to many Americans. They also discourage homeowners who locked in low rates two years ago from selling.

The terms of Zillow’s down payment program are currently vague, though the real estate marketplace advised aspiring buyers to prepare for getting a mortgage by not closing any accounts and holding off on financing large new purchases.
AFP via Getty Images

According to the National Association of Realtors, first-time homebuyers, on average, put down 6% of the purchase price at the time of closing, while repeat buyers typically put down 13%.

It’s a common misconception that buyers need to purchase 20% equity in their home at the time of sale, the association said, which has discouraged many aspiring homeowners from shopping around or applying for a mortgage.

The issues in the housing market are compounded by a lack of inventory as buyers who locked in lower borrowing costs from as recent as two years ago are now reluctant to sell and jump into a higher rate on a new property.

It’s a key reason new home listings were down nearly 21% nationally in July from a year earlier, according to Realtor.com.

Meanwhile, mortgage rates have been rising along with the 10-year Treasury yield, used by lenders to price rates on mortgages and other loans.

The yield has been climbing as bond traders react to more reports showing the US economy remains remarkably resilient, which could keep upward pressure on inflation, giving the Federal Reserve reason to keep interest rates higher for longer.

High inflation drove the Fed to raise its benchmark interest rate 11 times since March 2022, with the latest hike lifting the federal funds rate to a range between 5.25% and 5.5%. 

The hike sent the benchmark rate to its highest point since 2001 — and Powell signaled that another increase is possible before the year’s out as officials continue to wrestle with stubbornly high inflation.

With Post wires.

Source: nypost.com

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Both 15-year fixed and 30-year fixed refinances saw their mean rates sink this week. The average rate on 10-year fixed refinance also went down.

At the start of the pandemic, refinance rates hit a historic low. But in early 2022, the Federal Reserve began hiking interest rates in an effort to curb high inflation. While the Fed doesn’t directly set mortgage rates, its series of rate hikes has led to an increased cost of borrowing among most consumer loan products, including mortgages and refinances.

After hitting pause on its rate hiking campaign in June, the Fed voted once again to bump up its benchmark short-term interest rate, the federal funds rate, by 25 basis points (or 0.25%) at its July 26 Federal Open Market Committee meeting.

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 refinance rates.

A higher federal funds rate could result in a slight increase in mortgage rates, according to Krieg Tidemann, assistant professor of economics at Niagara University.

But if inflation continues to decline and the Fed is able to hold rates steady — and eventually cut them in 2024 — mortgage rates should see some relief. But, a return of rates in the 2% to 3% range is unlikely. Unless you purchased a house within the past year, it’s unlikely you can save money by refinancing to a mortgage with a lower rate.

Regardless of where rates are headed, homeowners shouldn’t focus on timing the market, and should instead decide if refinancing makes sense for their financial situation. As long as you can get a lower interest rate than your current one, refinancing will likely save you money. Do the math to see if it makes sense for your current finances and goals. If you decide to refinance, make sure you compare rates, fees and the annual percentage rate — which shows the total cost of borrowing — from different lenders to find the best deal.

30-year fixed-rate refinance

The average 30-year fixed refinance rate right now is 7.69%, a decrease of 7 basis points over this time last week. (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. If you’re having difficulties making your monthly payments currently, a 30-year refinance could be a good option for you. However, interest rates for a 30-year refinance will typically be higher than rates for a 10- or 15-year refinance. It’ll also take you longer to pay off your loan.

15-year fixed-rate refinance

For 15-year fixed refinances, the average rate is currently at 6.86%, a decrease of 3 basis point over last week. Refinancing to a 15-year fixed loan from a 30-year fixed loan will likely raise your monthly payment. On the other hand, you’ll save money on interest, since you’ll pay off the loan sooner. You’ll also typically get lower interest rates compared to a 30-year loan. This can help you save even more in the long run.

10-year fixed-rate refinance

For 10-year fixed refinances, the average rate is currently at 6.85%, a decrease of 3 basis points from what we saw the previous week. Compared to a 15- or 30-year refinance, a 10-year refinance will usually have a lower interest rate but higher monthly payment. A 10-year refinance can help you pay off your house much faster and save on interest in the long run. Just be sure to carefully consider your budget and current financial situation to make sure that you can afford a higher monthly payment.

Where rates are headed

Mortgage rates hit a 20-year high in late 2022, but now the macroeconomic environment is changing again. Rates dropped significantly in January before climbing back up in February. Since the start of the summer, mortgage rates have been fluctuating between 6.5% and 7%.

Mortgage rates move up and down on a daily basis in response to a variety of economic factors, including inflation, employment and the outlook for the economy more broadly.

The most recent Consumer Price Index shows annual inflation was at 3.0% for the 12-month period ended in June, down sharply from May’s 4.0% figure.

“Barring some radical change in the trajectory of inflation or a recession, it seems unlikely that the Fed will further increase interest rates after July. This means that mortgage rates are likely at or near their peak,” Tidemann said.

Mortgage rates are unlikely to decrease dramatically any time soon, but positive signaling from the Fed and cooling inflation may ease some of the upward pressure on them.

We track refinance rate trends using information collected by Bankrate. Here’s a table with the average refinance rates provided by lenders across the country:

Average refinance interest rates

Product Rate A week ago Change
30-year fixed refi 7.69% 7.76% -0.07
15-year fixed refi 6.86% 6.89% -0.03
10-year fixed refi 6.85% 6.88% -0.03

Rates as of Sept. 15, 2023.

How to find the best refinance rate

It’s important to understand that the rates advertised online often require specific conditions for eligibility. Your 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. You can get a good feel for average interest rates online, but make sure to speak with a mortgage professional in order to see the specific rates you qualify for. To get the best refinance rates, you’ll first want to make your application as strong as possible. The best way to improve your credit ratings is to get your finances in order, use credit responsibly and monitor your credit regularly. Don’t forget to speak with multiple lenders and shop around.

Refinancing can be a great move if you get a good rate or can pay off your loan sooner — but consider carefully whether it’s the right choice for you at the moment.

When should I refinance?

Most people refinance because the market interest rates are lower than their current rates or because they want to change their loan term. When deciding whether to refinance, be sure to take into account other factors besides market interest rates, including how long you plan to stay in your current home, the length of your loan term and the amount of your monthly payment. And don’t forget about fees and closing costs, which can add up.

As interest rates increased throughout 2022, the pool of refinancing applicants contracted. If you bought your house when interest rates were lower than they are today, there may not be a financial benefit in refinancing your mortgage.

Source: cnet.com

Apache is functioning normally

Changes in interest rates set by the Federal Reserve are a tool the central banks use to control inflation. Of course, these changes also tend to have a direct and immediate impact on mortgage rates. When the bank raises rates to discourage inflation, rates for borrowing, including mortgages, also rise, increasing the cost of buying a home.

During the Great Recession from December 2007 to June 2009, interest rates plunged and have remained at very historically low levels ever since.

Are Rising Rates on the Horizon?

Last December, the Fed raised rates for the first time, but very modestly, only 1/4 to 1/2 percent. It also announced it will increase the interest rates more in the future if necessary to lower the inflation rate to 2 percent. However, the Fed made it very clear that it will take its time doing so.

The Fed’s Open Markets Committee said that it expects that “economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”

In the months since interest rates have declined. A less than vibrant economy, the economic instability created by Britain’s vote to exist the EU, and continued low inflation convinced the Fed not to raise rates even modestly at its April and July meetings.

The outlook for September did not improve with the release of the second-quarter gross domestic product report.

“Despite the more hawkish language in last week’s FOMC statement, the GDP data have significantly reduced the chances of a near-term rate hike,” said Andrew Hunter, economist at Capital Economics told Marketwatch. To move, the Fed would want to see clear signs of an acceleration before they green light the next rate hike, Hunter said. “That would appear to rule out a September rate rise since the third-quarter GDP data will not be available until late October,” Hunter said.

On the other hand, conditions might strengthen enough for a modest increase.

What does that mean for buyers?

For home buyers, the outlook is comforting. The forecast for a September increase is slight and even should one occur, it would make very little if any difference on the interest rates borrowers pay on mortgages. Today’s terrific rates will almost certainly continue through the fall and perhaps carry us through the end of 2016.

Source: totalmortgage.com