Mortgage Refinance Rates on July 5, 2023: Rates Increase

Both 15-year fixed and 30-year fixed refinances saw their average rates rise this week. The average rates for 10-year fixed refinances also made gains.

On the heels of cooling inflation, the Federal Reserve opted to pause its current rate-hiking cycle. During its June meeting, the central bank decided to hold its benchmark interest rate at a range of 5.00% to 5.25%. After hiking rates aggressively since March 2022, the Fed has signaled that it will use this pause as an opportunity to study incoming economic data. Refinance rates, like mortgage rates, fluctuate on a daily basis and could see further movement in response, or they could stay generally the same.

“Mortgage rates will likely continue to move up and down on a week-to-week basis, even as the Fed pauses its rate hikes. The reason for this is because the Fed doesn’t directly set mortgage rates,” said Jacob Channel, senior economist at loan marketplace LendingTree. “That said, a pause in the Fed’s hikes could help keep refinance rates more stable than they’ve been this year.”

Current Mortgage Rates for July 2023

Mortgage refinance rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.

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.

With inflation falling steadily from its peak last summer, the Fed is taking a break from rate hikes. Depending on incoming inflation data, the Fed may hold rates where they are — but not cut them — until inflation reaches its 2% goal.

“Ultimately, more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates,” said Odeta Kushi, deputy chief economist at First American Financial Corporation.

As the Fed aggressively ratcheted up its federal funds rate in 2022, refinance rates spiked, but we’re seeing signs that rates may be slowly starting to level out as inflation eases.

For the first three meetings of 2023, the Fed has adopted smaller rate increases — 25 basis points as compared with the 75- and 50-basis-point increases common last year — as it waits to see the cumulative effects of policy changes on inflation.

Looking at average mortgage rate data for the past year, mortgage rates hit a peak in late 2022 and have been trending down since then. We’re still a long way from the record-low refinance rates of 2020 and 2021, but borrowers may see rates fall in 2023.

“With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably,” said Greg McBride, CFA and chief financial analyst at Bankrate. He expects 30-year fixed mortgage rates to end the year near 5.25%.

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 rate, refinancing will likely save you money. Do the math to see if it makes sense for your current finances and goals. If you do 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 current average interest rate for a 30-year refinance is 7.29%, an increase of 4 basis points from what we saw one week ago. (A basis point is equivalent to 0.01%.) One reason to refinance to a 30-year fixed loan from a shorter loan term is to lower your monthly payment. Because of this, a 30-year refinance can be a good idea if you’re having trouble making your monthly payments. In exchange for the lower monthly payments though, rates for a 30-year refinance will typically be higher than 10- or 15-year refinance rates. You’ll also pay off your loan slower.

15-year fixed-rate refinance

The average rate for a 15-year fixed refinance loan is currently 6.68%, an increase of 9 basis points from what we saw the previous week. Refinancing to a 15-year fixed loan from a 30-year fixed loan will likely raise your monthly payment. However, you’ll also be able to pay off your loan quicker, saving you money over the life of the loan. Interest rates for a 15-year refinance also tend to be lower than that of a 30-year refinance, so you’ll save even more in the long run.

10-year fixed-rate refinance

For 10-year fixed refinances, the average rate is currently at 6.79%, an increase of 6 basis points compared to one week ago. 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 quicker and save on interest. 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

At the start of the pandemic, refinance interest rates hit a historic low. But in early 2022, the Fed started hiking interest rates in an effort to curb runaway inflation. While the Fed doesn’t directly set mortgage rates, the Fed rate hikes led to an increased cost of borrowing among most consumer loan products, including mortgages and refinances. Mortgage rates hit a 20-year high in late 2022.

Recent data shows that overall inflation has been falling slowly but steadily since it peaked in June 2022, but it still remains well above the Fed’s 2% inflation goal. After raising rates by 25 basis points in March, the Fed has indicated (PDF) it plans to slow — but not stop — the pace of its rate hikes throughout 2023. Both of these factors are likely to contribute to a gradual pull-back of mortgage and refinance rates this year, although consumers shouldn’t expect a sharp drop or a return to pandemic-era lows.

We track refinance rate trends using data collected by Bankrate. Here’s a table with the average refinance rates supplied by lenders across the US:

Average refinance interest rates

Rates as of July 5, 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.

Is now a good time to refinance?

Generally, it’s a good idea to refinance if you can get a lower interest rate than your current interest rate, or if you need to change your 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.