Key Takeaways
- Refinance rates remain elevated compared with recent history, often staying in the upper-5% to low-6% range as 2026 begins — a big shift from the ultra-low rates of previous years.
- Refinance activity has grown as some borrowers seek lower payments, but cash-out refinances represent a smaller share of total refis than in previous cycles, suggesting caution among homeowners.
- Rate reductions are expected to be modest at best; many homeowners with current low rates may find traditional refinancing less beneficial, especially if it increases monthly payments.
- For homeowners prioritizing monthly cash flow relief or flexibility, zero-payment alternatives including equity sharing agreements are increasingly part of the conversation.
Refinancing Was a Homeowner’s Best Friend. What Changed?
For many years, refinancing — especially cash-out refinancing — served two common goals for homeowners:
- Lowering monthly payments by replacing an old mortgage with a new one at a lower interest rate.
- Accessing home equity for debt consolidation, remodels, tuition, or other financial needs.
That approach worked particularly well during a time when mortgage rates fell sharply year after year. It allowed homeowners to refinance into much lower monthly payments, while also pulling cash out of their home’s equity.
Since 2022, however, rates have climbed and stabilized at levels far above the pandemic lows. As a result, many refinances today tend to be rate-and-term refis, used purely for lowering payments if and when rates drop slightly. Cash-outs for equity access are still prevalent, but as the numbers have stopped adding up for homeowners, they’ve started to lose popularity. According to the Federal Housing Finance Agency, cash-out refinances represented 63% of all refinance activity in August 2025, having peaked at 82% as recently as 2022.
Mortgage Rate Reality in Early 2026
As homeowners survey the market in 2026, the rate landscape looks very different from recent recessions or rate-cut cycles.
- Refinance and mortgage rates have drifted into the upper-5% to lower-6% range, a big shift from the extremely low rates that drove refinance booms in the early 2020s.
- Forecasts suggest rates could average 6.0%-6.4% if broader economic conditions foster minor easing, but significant drops below 6% are unlikely.
For homeowners with existing mortgage rates below today's averages, refinancing may not produce enough monthly savings (especially after closing costs) to make it worthwhile.
In practical terms: if your current rate is in the 5% range or lower, moving to a 6% loan in 2026 could actually raise your monthly cost, or offer only modest savings that take too long to offset closing fees.
When a Cash-Out Refi Still Makes Sense
Refinancing with cash-out can still make sense if:
- You’re carrying a relatively high existing mortgage rate (e.g., above 7%).
- The projected refinance rate offers meaningful monthly savings even after closing costs.
- You plan to stay in the home long enough to benefit from cumulative payment relief.
- You’re consolidating high-cost debt into a lower rate and the math is clear.
But for many homeowners in 2026, the calculus isn’t that straightforward. And for owners with existing rates lower than current averages, the math simply won’t work in your favor.
Alternatives for Accessing Home Equity Without Increasing Monthly Burden
If you’re hesitant to refinance but still need cash for renovations, debt repayment, education costs, or just financial breathing room, there are other paths homeowners are considering:
The Zero-Interest Alternative: Equity Sharing
One option gaining traction is a home equity sharing agreement, like those offered by Unison. With this approach, you receive cash upfront in exchange for sharing a portion of your home’s future value — but you don’t take on interest or make monthly payments.
That can make sense for homeowners who:
- Want to preserve monthly cash flow.
- Have a low existing mortgage rate they don’t want to reset.
- Need cash, but don’t want another recurring monthly payment.
Equity sharing is not free money: instead of paying interest, homeowners exchange a share in the future appreciation (or in certain cases, the depreciation) of their home’s value. It’s a clear trade-off in the long run –– but it can be an innovative solution to help homeowners move forward today, without adding another monthly obligation.
Other Equity Sharing Options
Some homeowners might still want the structure of a more traditional loan, but with lower monthly payments. Unison designed the Equity Sharing Home Loan to accomplish exactly that – with a ten-year, interest-only loan that uses equity sharing to unlock a significantly lower interest rate and smaller monthly payments than most alternatives. It offers a repayment path that’s typically more affordable than a standard second mortgage or HELOC.
How to Know If Refinancing Is Right for You
There’s no big secret behind refinancing –– just a bit of math! Generally, a refinance makes sense if:
- Your new rate is significantly lower. Ensure you’re saving enough to justify the closing costs within your planned timeframe.
- You plan to stay in your home long enough to recoup that cost with lower payments.
- You benefit from consolidating high-cost debt or eliminating private mortgage insurance (PMI).
If you fall into these categories, a cash-out or rate-and-term refinance may still be worth exploring.
But in 2026’s rate environment, that comfort zone has tightened. As a result, many homeowners are understandably looking for alternatives that give them cash today and short-term flexibility, without increasing monthly obligations.
Bottom Line: Your 2026 Re-Fi Reality Check
Refinancing remains a valuable tool for some — especially those who locked in a high mortgage rate at some point and can now meaningfully reduce monthly payments, while accessing cash. But in 2026’s rate environment, many homeowners are finding that a traditional cash-out refinance isn’t likely to be the right answer.
Whether you refinance or consider a more innovative alternative, focusing on monthly cash flow, timeline, and long-term goals will always be more important than chasing a specific rate.
And if preserving monthly flexibility is your priority, exploring equity sharing alternatives could make your 2026 financial plan feel more resilient –– and more in your control.
Questions Homeowners Ask About Refinancing in 2026
Will refinancing rates drop dramatically in 2026?
Experts suggest refinance rates may ease into the upper-5% to mid-6% range, but it’s extremely unlikely that they return to the ultra-low levels of years past.
What is a cash-out refinance?
A cash-out refinance replaces your existing mortgage with a larger one and gives you the difference in cash, usually at a new interest rate.
Is refinancing worth it if I already have a low rate?
If your current rate is below the current market average, refinancing is unlikely to provide meaningful monthly savings after closing costs.
What are alternatives to refinancing?
Some homeowners are accessing equity without new monthly payments through Unison’s Equity Sharing Agreement, or by choosing lower-payment lender products that blend features of loans and equity partnerships, like Unison’s Equity Sharing Home Loan.
Can refinancing help with debt consolidation?
Yes — if the numbers work in your favor. But when rates are high, consolidating debt with a new loan may not always be the most cost-effective choice.
Disclaimer: This sponsored content is for informational purposes only and is not financial, legal, or tax advice. Unison’s Equity Sharing Agreement (ESA), offered through Unison Agreement Corp., provides cash upfront with no monthly payments or interest charges. In exchange, you share a percentage of your home’s future appreciation (or a limited portion of any depreciation) when the agreement ends (upon sale, refinance, buyout after 5 years, 30-year term, or death/default). If your home depreciates, Unison typically shares in a portion of the loss, subject to program limits—you may still owe the full advance amount. A lien is placed on your property, which may limit future refinancing options. There may be tax implications (e.g., potential recognition of income on forgiveness of advance if the home depreciates). No guarantees are made regarding home value changes or outcomes. For complete terms, eligibility, and details, visit unison.com. For traditional lending products, see Unison Mortgage Corp., NMLS #2574289. Always consult your own financial, legal, and tax professionals before proceeding.