According to Bankrate.com, the national average 30-year fixed rate was 3.89% for refinance mortgages (as of 4/2/15). Just three years ago, in 2012, the mortgage refinance rate was 3.68%. There’s no telling when, or if, interest rates will rise, but they are historically low right now, according to data collected by Freddie Mac that analyzed 30-year mortgage rates since 1971.
Among other factors, mortgage rates tend to fluctuate simultaneously with the interest rate on the 10-year U.S. Treasury Bond. Forces of supply and demand cause the strong buying interest in treasuries, which drives prices up and yields (interest rates) down.
I’m not saying that everyone should run out and refinance simply because interest rates are low. You might already have a comparatively low rate. What you should consider is how long you have been paying down your current mortgage, what the new monthly payments would be, and how long you plan to stay in your home.
Consider the closing costs typically associated with a mortgage refinance too. These costs typically run a few thousand dollars. Let’s say the refinance saves you $150 per month. That means it will take you 20 months to break-even on $3,000 worth of closing costs.
Lastly, it pays to shop around. A good place to start is your current mortgage holder. Some lenders even offer no-closing-cost refinances that charge you a slightly higher interest rate to avoid paying closing costs out of pocket.