If you’re a homeowner thinking about refinancing your mortgage, now might be a good time to start comparing rates—but your zip code could make a bigger difference than you think.
As of Monday, July 8, the national average for a 30-year refinance loan stood at 7.00%, according to data from Zillow. While that’s slightly up from last week’s 6.95%, it’s still near a three-month low, offering a modest window of opportunity for those looking to cut long-term interest costs.
That said, where you live matters. A lot.
Refinance rates aren’t set by the federal government—they’re influenced by local lending conditions, borrower profiles, and even regional regulations. That’s why residents in states like California, New York, Florida, North Carolina, Washington, New Jersey, and Tennessee are seeing relatively favorable rates ranging from 6.84% to 6.96%. Meanwhile, borrowers in West Virginia, Alaska, Delaware, Kentucky, and New Mexico are dealing with rates as high as 7.10%.
Take Sam and Julia, a married couple in San Jose, California, who purchased a three-bedroom townhouse last year. Their original mortgage had a 7.25% fixed rate. But after seeing recent headlines about falling rates, they began shopping around. With quotes between 6.85% and 6.95%, they realized that refinancing now could save them over $200 a month on their mortgage—and more than $70,000 in interest over the life of their loan.
But here’s the catch: not all rates you see online are realistic. Many “teaser” rates advertised on lender websites are based on near-perfect credit scores, unusually small loan amounts, or require you to pay points upfront. The average homeowner, with a credit score in the 680–739 range and a standard 20% down payment, is likely to get something closer to what Zillow reports.
Here's what the average refinance rates look like now:
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30-Year Fixed: 7.00%
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FHA 30-Year Fixed: 7.44%
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15-Year Fixed: 5.83%
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Jumbo 30-Year Fixed: 6.89%
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5/6 ARM: 7.45%
For homeowners who can stomach higher monthly payments, the 15-year fixed option offers a much lower rate—and significant interest savings. But for most families, the 30-year fixed mortgage remains the go-to option due to its predictability and long-term affordability.
Let’s take a real-world example. Say a couple in Orlando is buying a $440,000 home with a 20% down payment. If they lock in a 6.67% interest rate on a 30-year mortgage, their monthly payment—including taxes and insurance—would come out to roughly $2,649. But if their rate jumps to 7.10%, that monthly figure increases significantly. Over time, even small changes in interest rates can cost—or save—you tens of thousands.
So, what actually drives these rates up or down?
The answer lies in a mix of economic and policy factors. Mortgage rates generally follow the 10-year Treasury yield, which responds to everything from inflation data to investor sentiment. The Federal Reserve also plays a key role—though not directly. During the early days of the pandemic, the Fed bought massive amounts of bonds to stimulate the economy, pushing mortgage rates down. But starting in late 2021, the Fed tapered off those purchases and began hiking the federal funds rate to curb inflation.
Between March 2022 and July 2023, the Fed raised its benchmark rate by a whopping 5.25 percentage points. Even though this rate doesn’t directly set mortgage rates, it heavily influences them. Since peaking last summer, the Fed has held its rate steady for over a year, only cutting slightly in September, November, and December of 2024.
So far in 2025, the Fed has shown restraint—choosing to hold rates steady in all four meetings to date. With four more meetings scheduled this year, there’s no guarantee of further cuts in the short term.
All of this means homeowners can’t just sit back and wait for perfect timing.
The smartest move is still to shop around—compare quotes from multiple lenders, ask questions about what’s included in the rate, and don’t be fooled by flashy online ads promising unrealistically low offers.
Because whether you’re in sunny California or snowy Alaska, the real key to saving money on your mortgage might just be doing your homework.