Mortgage Rates Remain Elevated Despite Fed Cuts

On June 26, 2025, the average refinance rate for a 30-year, fixed-rate mortgage stood at 6.83%. This rate is indicative of the broader mortgage market, where various loan types and terms are available for homeowners looking to refinance. For instance, a 20-year conventional mortgage has an average rate of 6.51%, while a 15-year conventional mortgage is at 5.88%. The 10-year conventional mortgage rate is slightly higher at 5.85%. Jumbo mortgages, which are larger than conventional loans, have a 30-year rate of 7.12% and a 15-year rate of 6.93%. FHA loans, which are government-backed, offer a 30-year rate of 6.66% and a 15-year rate of 6.19%. VA loans, another type of government-backed mortgage, have a 30-year rate of 6.52% and a 15-year rate of 5.83%.

Mortgage refinancing involves replacing an existing loan with a new one, a process that requires meeting the lender’s criteria, including credit profile, income verification, and debt-to-income ratio. The application process may temporarily lower your credit score due to a hard inquiry, and there is a risk of denial if you do not meet the lender’s requirements.

Despite hopes that mortgage interest rates might decrease following the Federal Reserve’s cuts to the federal funds rate late last year, rates have remained near 7% for 30-year, fixed-rate loans nationwide. There was a slight dip toward the end of February where the average rate fell closer to 6.5%, but rates remain significantly elevated compared to the pandemic-era lows in the range of 2% and 3%. As of the third quarter of 2024, 82.8% of homeowners with mortgages had rates below 6%, meaning a large number of Americans are experiencing the lock-in effect, unable to move or refinance because they’re hanging onto a once-in-a-lifetime rate.

Refinancing can be beneficial under certain circumstances. One guideline is that it makes sense to refinance if you can secure a rate at least a percentage point lower than your current rate. For example, if you took out a loan at 7% and rates have since declined, refinancing at 6% would likely result in long-term savings. Additionally, refinancing can help tap into home equity via a cash-out refinance, which typically requires at least 20% equity. Refinancing can also help change your loan term or switch loan types, such as moving from an FHA loan to a conventional loan to eliminate the FHA loan’s lifetime mortgage insurance requirement, or from an adjustable-rate mortgage to a fixed-rate mortgage to avoid potential rate hikes. Furthermore, refinancing can be beneficial if you want to adjust your loan term, such as switching from a 15-year to a 30-year mortgage for smaller monthly payments.

Refinancing involves closing costs, typically ranging from 2% to 6% of the loan amount. For a $300,000 loan, costs might range from $6,000 to $18,000. Common costs include lender origination fees, appraisal fees, title search and insurance fees, loan application fees, survey fees, attorney fees, recording fees, and prepayment penalties if applicable.

There are various types of mortgage refinance loans available, each serving different purposes. A rate-and-term refinance allows homeowners to secure a lower interest rate or change their loan term. A cash-out refinance enables homeowners to tap into their home’s equity by paying off the existing loan balance and accepting a new, larger one, with the difference withdrawn in cash. A no-closing-cost refinance involves the lender covering the closing costs in exchange for a higher interest rate. A streamline refinance is available to existing FHA, VA, and USDA loan borrowers and typically involves less documentation and a more straightforward application process.

Homeowners are not required to refinance with their original lender and may benefit from shopping around for better rates and service. Some lenders offer incentives, such as waiving closing costs, for staying with them. Additionally, homeowners whose mortgages have been purchased by certain entities might be eligible for programs like Refi Now and Refi Possible.