How Have 15-Year Mortgage Cash-Out Refinance Rates Changed?
Published March 13, 2022
Are you thinking about applying for a cash-out refinance mortgage? Reducing your mortgage term with a 15-year fixed-rate mortgage has many benefits, but you’ll want to ensure you’re getting a great rate when you refinance. The reality is that today’s 15-year mortgage cash-out refinance rates are attractive, and they pave the way for you to enjoy substantial benefits from your refinance. How does the current rate stack up to the previous 15-year mortgage cash-out refinance rates?
A look at historical rates for a 15-year mortgage
Over the last 30 years, 15-year mortgage cash-out refinance rates have trended downward. However, there have been significant peaks and valleys during that period. For example, between 1992 and 1995, 15-year mortgage cash-out refinance rates hovered close to 8.9 percent at two notable peaks. The lowest rate during this time was below 6.65 percent. This reflects the incredible variation of the 15-year fixed-rate mortgage over a relatively short period of time.
Between 1995 and 2006, the rate fluctuated between a high of 8.24 percent and a low of 4.6 percent. Notably, this was a time of steady economic growth. As a result, many people took advantage of the low-interest rates during this period to lock in a lower interest rate through a refinance.
After 2008, 15-year mortgage cash-out refinance rates began trending downward quickly. This, of course, was the time of the 2008 housing crisis, which contributed to a notable recession. The Federal Reserve slashed rates several times in an attempt to stabilize the market. In early May 2013, the average interest rate for a 15-year fixed-rate mortgage was close to 2.5 percent. As the economy recovered, rates began to even out, but they stayed below 4.5 percent.
More recently, the Federal Reserve has indicated that it will increase its lending rate with a series of hikes over the next few years. This has already led to a modest upward trend. However, you should be aware that the 15-year mortgage refinance rates fluctuate daily. This fluctuation can make it difficult to accurately time the market and lock in the best interest rate available. Therefore, if you’re interested in refinancing to a 15-year mortgage, the best time is when you’re ready to make a move.
Factors that impact 15-year mortgage cash-out refinance rates
At this point, you’re probably wondering: Why do 15-year mortgage cash-out refinance rates fluctuate so frequently? Your new mortgage’s interest rate will drive the monthly payment. At the same time, it plays a role in the total interest accumulation that you are responsible for over the life of the loan and how quickly your home equity accumulates. While you understandably want to lock in the lowest interest rate possible, you should be aware that various major economic factors drive 15-year fixed-rate mortgages.
For example, mortgage interest rates rise as inflation increases. This is because lenders must ensure that they profit through their lending activities. The economic growth rate, including the growth of the gross domestic product, can also drive mortgage interest rates. In a growing economy, rates tend to trend higher. In addition, the Federal Reserve Bank’s monetary policy impacts the supply of money available at banks, which directly contributes to the interest rates consumers pay for their mortgages. Trends in the housing market affect the demand for mortgages, and the supply and demand directly impact mortgage rates. Even the bond market has an impact on mortgage interest rates.
Personal factors that affect the interest rate you qualify for
Several other factors may impact the 15-year mortgage cash-out refinance rates that you lock in during a refinance. These are factors that are directly linked to your personal qualifications. For example, a higher credit score indicates less risk of default, which means you may have access to a lower interest rate. Your debt-to-income ratio is also considered, and liquidity, job security and history, your down payment, and other factors can come into play. Because of these factors, lenders usually have hard-and-fast requirements that their applicants must meet for loan approval. Know that when you work with American Financing on your mortgage refinance, we’ll work with you to get the best rate possible. Each person brings unique experiences and qualifications to the table, and we do what we can to honor that individuality.
Reasons to consider a 15-year fixed-rate mortgage
Are you trying to decide if you should apply for a 15-year fixed-rate, cash-out loan? It’s impossible to accurately predict which direction interest rates will go in the near future. A variety of economic, political, and other factors are at play. However, because today’s interest rates are relatively close to historical lows, it makes sense to anticipate upward movement in the years to come. If you plan to apply for a cash-out refinance loan, now may be the right time for you.
But is a 15-year fixed-rate mortgage right for you? Compared to a 30-year fixed-rate mortgage, a 15-year term enables you to pay off your principal balance much faster. This results in a more rapid accumulation of equity and less interest charged over the life of the loan. In fact, you could save tens of thousands of dollars (or more) if you opt for a 15-year fixed-rate loan over a 30-year fixed-rate loan. In addition, by refinancing out of your current 30-year fixed-rate loan and moving up your loan payoff date, you could also enjoy considerable financial savings. At the same time, moving up your loan payoff date may help you meet major financial goals, such as retiring by a specific year.
Explore your options today
If you’re interested in taking advantage of the benefits of a cash-out refinance loan, give us a call or fill out our contact form. Your next step should be to learn more about today’s 15-year mortgage cash-out refinance rates. Then, we’ll help you understand exactly how you stand to benefit from this type of refinancing.