The current mortgage rates of 6% to 7% are understandably not very appealing to the majority of U.S. homeowners who have rates below 6%. “Even though rates in the 7% range are normal today, they don’t feel normal to the consumer,” says Christopher M. Naghibi, Esq., executive vice president and chief operating officer of First Foundation Bank. “It’s more than double the rates they just saw advertised everywhere.”

The main benefit of refinancing a mortgage is to take advantage of a lower interest rate which lowers your borrowing costs. However, for many, refinancing right now will have the opposite effect. But when will that change? We asked some experts for their predictions.

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When will mortgage refinancing be worth it again?

Mortgage experts say a mortgage refinance could be worth it now for some homeowners, while others will need to wait for rates to come down. 

If you bought a home after rates went up, it may already make sense to refinance. “For many of last year’s home buyers, it’s already a good time to refinance — especially for those who pay private mortgage insurance,” says Dan Green, the chief executive officer of Homebuyer.com. 

Green explains that with home values up and mortgage rates down, many homeowners can refinance to a lower-rate mortgage that doesn’t require PMI.

If the Fed cuts rates later this year, a drop in mortgage rates could make refinancing worth it for some other homeowners. 

“As sentiment moves towards a Federal Reserve interest rate cut in the second half of 2024, we will see mortgage rates move down in anticipation of the Fed’s actions,” says Shmuel Shayowitz, the president and chief lending officer of Approved Funding. 

See if mortgage refinancing makes sense for you here now.

Other considerations

When you have a large amount of higher-interest debt, a cash-out refinance could also make sense now or as rates drop.

“At some point in the future, we will hit an inflection point where taking out the equity in homes has more value to consolidate debt like credit cards, car loans, and student loans,” says Naghibi. 

Naghibi says that your aggregate debt payments may be less once consolidated through a refinance, even with a 7% interest rate. “Remember, credit cards have rates above 20% right now. So depending on your balance, a refinance may save you a lot of money over time,” Naghibi said. 

The bottom line

Whether a mortgage refinance is worth it or not is going to depend on your specific situation and the prevailing interest rates. 

“A threshold for mortgage refinancing to become worthwhile again could be when interest rates fall below 5.5%,” says Jared Antin, managing director and licensed associate real estate broker at Elegra.

He explains that rates of 5.5% or less will present an opportunity for significant savings for those who secured rates of 6.5% or higher. “Conversely, those who already have exceptionally low rates, such as below 4%, are unlikely to find refinancing advantageous in the foreseeable future,” Antin says.