Nearly 3 Million Homeowners Could Be Leaving Money on the Table by Ignoring Their Mortgage

If you bought your home in the years following the pandemic, chances are your mortgage is sitting on a rate between 6% and 7%.

When the Federal Reserve hiked rates in 2022 to course-correct from historic lows, prospective and current homeowners began the long wait for the "magic number": a rate below 6%.

However, if you locked in a rate during 2023, refinancing now—even with rates hovering around 6.3%—could still save you a significant amount of money.

The cost savings of refinancing

Refinancing a 30-year fixed mortgage could lower payments for approximately 2.7 million homeowners, according to an analysis of lending data conducted by Bankrate.

With rates stalling out around 6%, those who are locked into loans above 7% now have a prime opportunity to refinance, potentially unlocking nearly $26 billion in collective savings over the next five years.

“This is actually the best rate environment that we have seen in the last 3 home buying seasons,” points out Alex Gailey, author of the report and economist with Bankrate. “Especially late February, early March, with rates going down below 6%, and we saw a sudden surge in refinance activity.” 

Consider the math: A $399,600 home loan—the average refinance application size, according to Bankrate—would carry a monthly payment of $2,146 at a 7.09% rate, compared with $1,987 at 6.34%. That’s a difference of nearly $160 per month, or about $1,900 per year.

With utility bills, property taxes, and insurance premiums on the rise across the country (not to mention gas and grocery prices), an extra $160 surely wouldn’t be unwelcome. 

And waiting for rates to drop is likely fruitless. 

“Most forecasts show rates staying in the low-to-mid 6% range for the rest of 2026,” explains Realtor.com® Senior Economic Research Analyst Hannah Jones. “Major forecasters (including Realtor.com) are not expecting a sharp drop anytime soon. That means if you're sitting on a 7%+ rate, it's worth running the numbers now.”

The numbers that really matter in refinancing

Financial experts generally suggest that refinancing is only worthwhile if you can lower your interest rate by 0.75 to 1 percentage point.

Mortgage rates currently stand at 6.3% as of April 30, according to Freddie Mac. 

“We have to acknowledge that it's been a tug of war with mortgage rates,” says Gailey. “We saw a three-week decline in April because of ongoing ceasefire negotiations with the Iran war, but really in the last few days we did see that rates started to go back up with ongoing geopolitical uncertainty, oil prices going back up, lack of clarity around inflation.”

Jones agrees that while numbers are rising, there is still a “silver lining” about the market right now.

“With no Fed meeting in May, now is actually a good window to shop around, and comparing offers from a few lenders can go a long way toward landing your lowest possible rate,” she adds.

That said, refinancing comes with fees, and that tends to be the trade-off many homeowners have to consider when it comes to a refi.

As the Bankrate report points out, the real "break-even" point depends on whether your monthly savings will eventually offset your closing costs. This math typically only favors those staying in their homes for the long haul. 

“A refinance is a loan transaction, not an ownership transfer, so it doesn't trigger a property tax reassessment in most states, and the lender's appraisal stays between you and your lender, never reaching the local tax assessor,” explains Jones. 

“Closing costs are a different story, typically running 2%–5% of the loan balance, and ‘no-closing-cost’ options aren't really free since those fees either get folded into the loan balance or offset with a slightly higher rate.”

Jones agrees with Gailey that the real calculus is not just about the rate drop, but “how long you plan to stay in the home, which is also the logic behind the 1–2 percentage point rule of thumb, in which you need enough monthly savings, sustained long enough, to actually come out ahead.”

Apart from the monthly math, Gailey recommends taking a pointed look at your financial report card before proceeding as well.

“What is really going to be the biggest factor that determines whether you get a standard OK rate and a great rate is really your credit score," adds Gailey. “I would really focus on the numbers that you can control, which is your credit score, your debt, and your budget, and that is really going to be the biggest factor that is going to get you to that rate that you really are wanting.“