Today’s 20-year mortgage refinance rates plunge below 5% | July 22, 2022

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Based on data compiled by Credible, three key mortgage refinance rates have fallen and one has risen since yesterday.

• 30-year fixed-rate refinance: 5.875%, up from 5.625%, +0.250
• 20-year fixed-rate refinance: 4.990%, down from 5.625%, -0.635
• 15-year fixed-rate refinance: 4.750%, down from 4.875%, -0.125
• 10-year fixed-rate refinance: 4.750%, down from 5.000%, -0.250

Rates last updated on July 22, 2022. These rates are based on the assumptions shown here.

If you’re thinking of doing a cash-out refinance or refinancing your home mortgage to lower your interest rate, consider using Credible. Credible's free online tool will let you compare rates from multiple mortgage lenders. You can see prequalified rates in as little as three minutes.

What this means: Mortgage refinance rates edged down for three key terms today, with 20-year rates falling more than half a point and dipping back under the 5% mark, while 30-year rates edged up. Rates for 10- and 15-year terms are more than a full percentage point lower than 30-year terms, meaning homeowners looking to refinance may want to consider a shorter term for greater interest savings. But homeowners looking to stick with a longer term should consider refinancing to a 20-year term while rates are under 5%.

WHAT IS CASH-OUT REFINANCING AND HOW DOES IT WORK?

How mortgage rates have changed over time

Today’s mortgage interest rates are well below the highest annual average rate recorded by Freddie Mac – 16.63% in 1981. A year before the COVID-19 pandemic upended economies across the world, the average interest rate for a 30-year fixed-rate mortgage for 2019 was 3.94%. The average rate for 2021 was 2.96%, the lowest annual average in 30 years.

The historic drop in interest rates means homeowners who have mortgages from 2019 and older could potentially realize significant interest savings by refinancing with one of today’s lower interest rates.

If you’re ready to take advantage of current mortgage refinance rates that are below average historical lows, you can use Credible to check rates from multiple lenders.

How to get your lowest mortgage refinance rate

If you’re interested in refinancing your mortgage, improving your credit score and paying down any other debt could secure you a lower rate. It’s also a good idea to compare rates from different lenders if you're hoping to refinance, so you can find the best rate for your situation.

Borrowers can save $1,500 on average over the life of their loan by shopping for just one additional rate quote, and an average of $3,000 by comparing five rate quotes, according to research from Freddie Mac.

Be sure to shop around and compare current mortgage rates from multiple mortgage lenders if you decide to refinance your mortgage. You can do this easily with Credible's free online tool and see your prequalified rates in only three minutes.

How does Credible calculate refinance rates?

Changing economic conditions, central bank policy decisions, investor sentiment, and other factors influence the movement of mortgage refinance rates. Credible average mortgage refinance rates reported in this article are calculated based on information provided by partner lenders who pay compensation to Credible.

The rates assume a borrower has a 740 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%.

Credible mortgage refinance rates reported here will only give you an idea of current average rates. The rate you receive can vary based on a number of factors.

Think it might be the right time to refinance? Be sure to shop around and compare rates with multiple mortgage lenders. You can do this easily with Credible and see your prequalified rates in only three minutes.

Are there any cons to refinancing?

Refinancing a mortgage can be a good way to lower interest costs over the life of a loan, shorten your repayment term, or secure a lower interest rate. But refinancing has some potential pitfalls, too.

It’s possible for refinancing to actually cost you more money than you’ll save if:

• You refinance into a repayment term that’s longer than your original mortgage. Longer repayment terms usually mean lower monthly payments – but higher interest rates and greater interest costs over the life of a loan. To reap the most savings from a refinance, try refinancing into a shorter term than you have for your current mortgage.
• You sell your home before you reach the break-even point on your new loan. Like your original mortgage, your refinance will come with closing costs. And it will take some time before your savings add up to as much as your closing costs.

That said, the con you need to consider first is closing costs. You’ll need to fund these from your own pocket, or roll them into the loan (which raises its lifetime costs). Closing costs typically run 3% to 5% – or more – of the amount you’re borrowing. So if you want to refinance your $200,000 loan to get a lower interest rate, you’ll pay an estimated $6,000 to $10,000 in closing costs.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com  and your question might be answered by Credible in our Money Expert column.

As a Credible authority on mortgages and personal finance, Chris Jennings has covered topics that include mortgage loans, mortgage refinancing, and more. He’s been an editor and editorial assistant in the online personal finance space for four years. His work has been featured by MSN, AOL, Yahoo Finance, and more.