Mortgage Rates: When to Refinance a Mortgage

refinance a mortgage

For a little history, prior to the big 2008 housing crash, the Federal Reserve had started quickly slashing the federal funds effective rate. The rate went from 6.25% all the way down to 0.5%. This rate is directly tied to the rate that banks charge their prime customers (the prime rate), by adding ~3%. Prime rate is directly correlated to mortgage rates. This led to banks cutting 15 and 30 year mortgage rates down to all-time historical lows of around 3% and 4%, respectively.

We’ve since seen a bit of bounce back over the last few months in mortgage rates, but they are still close to historical lows, at about 3.38% (15-year) and 4.48% (30-year). And all else being equal, refinance rates are about the same as regular mortgage rates on home purchases.


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