Mortgage Rates Remain High Despite Fed Cuts 82.8% Homeowners Have Rates Below 6%

On June 30, 2025, the average refinance rate for a 30-year, fixed-rate home loan stood at 6.74%, according to data from a popular real estate marketplace. This rate is indicative of the current market conditions for homeowners looking to refinance their mortgages. For those considering a refinance, the average interest rates for various loan types and terms are as follows: 20-year conventional mortgages at 6.29%, 15-year conventional mortgages at 5.75%, and 10-year conventional mortgages at 5.78%. Jumbo mortgages are slightly higher, with 30-year rates at 7.14% and 15-year rates at 6.73%. FHA loans offer 30-year rates at 6.52% and 15-year rates at 5.50%, while VA loans provide 30-year rates at 6.33% and 15-year rates at 5.75%.

Mortgage refinancing involves replacing an existing home loan with a new one, requiring applicants to meet lender criteria regarding credit profiles, proof of income, and debt-to-income ratios. This process can temporarily lower credit scores due to hard inquiries and may result in denial if applicants do not meet the lender's requirements. 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 rates dipped slightly toward the end of February, they are still well above the pandemic-era lows, where 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, with 82.8% of homeowners having a rate below 6% as of the third quarter of 2024.

Refinancing a mortgage can be beneficial under certain conditions. A common guideline suggests that refinancing is worth considering if the new rate is at least a full percentage point lower than the current rate. 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, provided they have at least 20% equity. Changing the loan term or switching loan types can also be reasons to refinance. For instance, switching from a 15-year mortgage to a 30-year mortgage can provide more flexible monthly payments, while switching from an FHA loan to a conventional loan can eliminate mortgage insurance costs. Similarly, refinancing from an adjustable-rate mortgage to a fixed-rate mortgage can provide stability against future rate hikes.

Refinancing a mortgage involves closing costs that 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, including rate-and-term refinance, cash-out refinance, no-closing-cost refinance, and streamline refinance. Each type serves different financial goals, such as lowering interest rates, tapping home equity, or simplifying the application process. 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.