Mortgage Rates Remain Near 7% Despite Fed Cuts

On June 16, 2025, the average refinance rate for a 30-year, fixed-rate home loan stood at 6.88%. This data, sourced from a popular real estate marketplace, provides a snapshot of the current mortgage refinance landscape. For homeowners considering refinancing, various loan types and terms are available, each with its own interest rate. Conventional mortgages, for instance, have rates ranging from 6.88% for a 30-year term to 5.94% for a 15-year term. Jumbo mortgages, which are larger loans, have rates of 7.84% for a 30-year term and 6.37% for a 15-year term. FHA loans, designed for borrowers with lower credit scores, offer rates of 6.56% for a 30-year term and 5.49% for a 15-year term. VA loans, available to veterans and their families, have rates of 6.46% for a 30-year term and 5.91% for a 15-year term.

Mortgage refinancing involves replacing an existing home loan with a new one, a process that requires meeting lender criteria similar to those for an initial mortgage application. This includes credit profile, proof of income, and debt-to-income ratio. A hard inquiry on the credit report may temporarily lower the credit score, and failure to meet lender requirements can result in denial of the refinance loan.

Despite hopes that mortgage interest rates would decrease following the Federal Reserve's cuts to the federal funds rate, rates have remained near the 7% mark for months. Although there was a slight dip in rates toward the end of February, they are still significantly higher than the pandemic-era lows, when some homeowners secured loans with rates in the 2% to 3% range. As a result, many homeowners are reluctant to refinance or move in the current environment. A report indicated that as of the third quarter of 2024, 82.8% of homeowners with a mortgage had a rate below 6%.

Refinancing a mortgage can be beneficial under certain conditions. One common guideline is that if a new rate is at least a full percentage point lower than the current rate, it may be worth refinancing. For example, someone with a 7% home loan might find it advantageous to refinance if rates drop to 6%. Additionally, refinancing can allow homeowners to tap into their home equity through a cash-out refi, change their loan term, or switch loan types. For instance, switching from an FHA loan to a conventional loan can eliminate the requirement for lifetime mortgage insurance, and refinancing from an adjustable-rate mortgage to a fixed-rate mortgage can provide stability against future rate hikes.

Refinancing a mortgage involves closing costs, which typically range from 2% to 6% of the loan amount. These costs can include lender origination fees, appraisal fees, title search and insurance fees, loan application fees, survey fees, attorney fees, recording fees, and prepayment penalties. There are various types of mortgage refinance loans available, each suited to different needs. These include rate-and-term refinance, cash-out refinance, no-closing-cost refinance, and streamline refinance. Homeowners can choose to refinance with their existing lender or shop around for better rates and services. Some lenders may offer incentives for sticking with them, such as waiving a portion of the closing costs, which can make refinancing more accessible.