economy
February 23, 2026
Mortgage rates fall below 6%—how to decide if refinancing is worth it for you
A $400,000 mortgage refinanced at today’s rates could lower monthly payments by roughly $260, though closing costs can offset those savings.
TL;DR
- 30-year fixed mortgage rates have dropped to 5.99%, down from 6.96% a year ago.
- Refinance applications have significantly increased, up 132% compared to the same week last year.
- A 1% drop in rate can be a good indicator to consider refinancing, but upfront closing costs (2-5% of loan balance) must be factored in.
- Calculate the break-even point by dividing closing costs by monthly savings; aim to recoup costs within 18 months to two years.
- Resetting the loan term, especially to a new 30-year term, can increase total interest paid over time.
- Refinancing should support overall financial goals, not just reduce immediate monthly bills.
- Lower mortgage rates are linked to a drop in the 10-year Treasury yield, influenced by inflation data and Federal Reserve expectations.
- Lender competition at the start of the year can also contribute to lower rates.
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