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The closing costs to refinance run between 2% to 5% of the loan amount, depending on the lender. You’ll also want to consider how long you plan on staying in your home as the closing costs can eat up your savings if you sell shortly after refinancing. For example, refinancing from a 5% mortgage with 26 years left on it to a 4% rate, but for 30 years, will cause you to pay more than $13,000 in interest.īefore you start shopping around for a lender, you can find out how much you could save by using a mortgage refinancing calculator.
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While refinancing options can lead to a lower monthly payment, not all of the options yield less interest over the life of the loan. Number of refinance-eligible homeowners (in millions) Number of Eligible Refinance Candidates Based on Interest Rates This leaves less than a million homeowners able to refinance their mortgage, according to Black Knight, a data analytics company.Įach time rates inch up, fewer borrowers will be able to save money by refinancing.īlack Knight defines refinance-eligible borrowers as having a minimum credit score of 720, 20% equity in their home and the ability to shave off at least 0.75% of their interest rate by refinancing into a 30-year fixed mortgage. Currently, the average rate on a 30-year fixed mortgage is hovering around 5.3%. With mortgage rates quickly rising, homeowners are racing to save money on refinancing. Considering the current situation, we’re more likely to see higher rates by the end of the year than lower ones.”
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Chief Economist Danielle Hale: “For mortgage rates, we’re likely to see upward pressure with much less intensity.Here are their more detailed predictions, as of late July 2022: As inflation increases, the Fed reacts by applying more aggressive monetary policy, which invariably leads to higher mortgage rates.Įxperts are forecasting that the 30-year, fixed-rate mortgage will vary from just above 5% to as high as 7% by the end of 2022. Rising inflation and the Federal Reserve’s moves are all putting pressure on mortgage rates. Mortgage Interest Rates Forecast for August 2022 That’s still nearly double the rate of 2.8% a year ago, according to Freddie Mac. That should cause mortgage rates to moderate to around 5.2% by the end of the year, he says.Īverage rates for a 30-year, fixed-rate mortgage have already surged to as high as 5.81% in late June, but have since leveled off at 5.30% as of July 28, according to Freddie Mac. Kan and other analysts see a double-edged sword, as the Fed’s actions are likely to curb interest rates by slowing economic growth. “Higher interest rates resulting from the Fed’s efforts to combat inflation, as well as the persistently high rate of inflation, are causing stresses for households and businesses,” says Joel Kan, an economist at the Mortgage Bankers Association (MBA). Before June, the last time the Fed hiked rates so much at one time was 1994. The central bank started hiking the benchmark interest rate in March, and in July raised rates 75 basis points for the second time this year. Another catalyst has been the Federal Reserve. In June, the consumer price index (CPI) surged 9.1% compared to a year ago, its steepest rise since 1981. Rising inflation is one reason rates are expected to climb. That means anyone hoping for rates to fall may be waiting for a while. Mortgage rates are more than two percentage points higher than at the start of the year, after registering the biggest quarterly climb in 28 years in the first quarter. Borrowing costs have surged over the past several months, impacting the bottom lines of homeowners and borrowers alike.