Rates Rise for 5-Year Variable-Rate Student Loan Refinancing

In the ever-changing landscape of student loan refinancing, rates for well-qualified borrowers have experienced fluctuations once again. This week, rates on 5-year variable-rate student loan refinance loans have risen for those utilizing the Credible marketplace. This development highlights the importance of staying informed and exploring various options when seeking to refinance student loans.

For borrowers with credit scores of 720 or higher who selected a lender through the Credible marketplace during the week of May 29, 2023, the average rates on 5-year variable-rate refinance loans stood at 8.71%. This marked an increase from the previous week’s rate of 5.98% and a significant rise from the rate of 3.26% recorded a year ago. Notably, the lowest point for rates in 2022 occurred during the week of July 4, when they reached a remarkable low of 3.12%.

In comparison, rates on 10-year fixed-rate refinance loans for well-qualified borrowers averaged 7.03% during the same week. This figure represented a slight decrease from the previous week’s rate of 7.12%. However, it is important to note that rates have significantly risen compared to a year ago when they stood at 4.91%.

These trends demonstrate the impact of market conditions on student loan refinancing rates. In 2022, borrowers witnessed historically low rates for both fixed and variable-rate loans. However, as the economy rebounds and interest rates adjust, borrowers are experiencing changes in the refinancing landscape.

It is worth mentioning that the ongoing relief measures for federal student loans, including the suspension of interest and payments, have minimized the incentive for borrowers to refinance their federal loans. This relief is expected to continue through the year, with the possibility of an extension up to 30 days past June 30, 2023. Despite this, borrowers with private student loans have been taking advantage of the current low-interest rate environment to secure better rates through refinancing.

The interest rate offered to borrowers seeking to refinance their student loans depends on several factors, including their FICO score, the loan type (fixed or variable rate), and the repayment term. The chart provided above indicates that good credit scores can lead to lower rates, while fixed-rate loans and longer repayment terms tend to carry higher rates. To make an informed decision, it is recommended that borrowers request rates from multiple lenders and utilize online tools such as Credible’s student loan refinancing calculator to estimate potential savings.

Credible, a multi-lender marketplace, has been empowering consumers to find the best financial products for their specific needs. Through integrations with leading lenders and credit bureaus, Credible provides consumers with the ability to compare accurate and personalized loan options without jeopardizing their personal information or impacting their credit score. The platform has received widespread acclaim, boasting over 5,000 positive Trustpilot reviews and a TrustScore of 4.7/5.

As the landscape of student loan refinancing continues to evolve, borrowers are encouraged to stay informed, explore options, and carefully consider the terms and conditions of any loan before making a decision.