Refi Rates Plummet to 5-Month Lows—And They’re Still Dropping! Should You Refinance Now?

Mortgage lenders didn't get the memo—rates are in freefall while they cling to last year's playbook.

The Refi Window Just Cracked Open

Borrowers are catching a break as 30-year fixed rates nosedive past February levels. No crystal balls here, but the trendline looks like a ski slope.

Bankers Hate This One Trick

Every 0.25% drop shaves $50/month off a $300k loan. That's latte money for you, existential dread for Wells Fargo.

Timing the Bottom? Good Luck

Waiting for 'the perfect rate' is like timing crypto dips—you'll miss the rally chasing the absolute bottom. The smart move? Run the numbers now before Wall Street 'discovers' inflation again.

Key Takeaways

• 30-year refinance rates on Wednesday fell to their lowest since March and are still trending down.
• Homeowners with mortgage rates above the mid-7% range could save thousands by refinancing.
• Refinancing often makes sense if your new rate is at least one percentage point lower than your current rate.
• Refi rates could fall further, or rise again, but most experts expect only slight declines over the next year.
• You can calculate your break-even point by comparing savings to refinance costs. But because you can refinance more than once, you don't need to wait for a "perfect" rate.
  

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Refinance Rates Drop to Lowest Level Since March

Rates on 30-year mortgage refinance loans have been trending down since mid-July, hitting a five-month low of 6.90% last week. After a brief uptick, the 30-year refi average has resumed its decline, falling another 7 basis points to 6.87%, the lowest since March 12. Real-time data suggests the rate could slip a bit further before Friday morning.

In April and May, the 30-year refi average surged above 7.30%, meaning today's sub-7% level is a significant improvement. Still, refinancing rates were even better in March, when the average hit a 2025 low of 6.71%.

Is It Time to Refinance? Here's When It Makes Sense

Refinancing could be worth exploring if your mortgage is in the high 7% or 8% range. The goal is to lock in a new rate low enough to offset the refinancing costs. When the savings outweigh the expenses, the MOVE can pay off in a big way over time.

"If you're refinancing solely to lower your interest rate, aim for at least a 1% reduction," said Phil Crescenzo Jr., vice president of the Southeast Division at Nation One Mortgage Corporation. "Sometimes there can be enough benefit from reducing the rate by less than 1%, but this is a good buyer goal in most refinances."

Refinancing isn’t just about rates, though. A "cash-out refinance" lets you tap your home’s equity at closing to pay off debt, fund renovations, or cover other expenses, Crescenzo said. "Eliminating private mortgage insurance or shortening your mortgage to align with retirement plans are also great reasons to refinance."

A simple way to see if refinancing makes sense is to calculate how long it will take to break even on the costs. For instance, if it takes three years to recoup the refinancing fees through lower monthly payments—but you plan to move before then—staying with your loan may be the smarter choice.

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Where Experts Say Mortgage Rates Are Headed

Refinance rates have dipped from spring highs, but the drop has been modest. If your mortgage rate is around the mid-7% range, the savings from refinancing right now may be too small to justify the switch.

"The recent adjustments to rates are helpful, but it may not be enough to get buyers off the fence yet," said Crescenzo.

However, mortgage rates are not guaranteed to continue falling. Industry forecasts predict only mild improvements through the end of this year, followed by another slight reduction in 2026. This means rates may not be much better a year from now.

It’s also important to remember that you aren't limited to refinancing just once, so you don't need to secure the "perfect" rate. If you refinance now and rates drop significantly down the road, you can always refinance again—provided the savings will justify the costs over a reasonable time frame.

Today's Mortgage Rate News

We cover new purchase and refinance mortgage rates every business day. Find our latest rate reports here:

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• Today's Refinance Rates

How We Track the Best Mortgage Rates

The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680-739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2025. Use is subject to the Zillow Terms of Use.