A one-point drop in your mortgage rate saves about $67 a month for every $100,000 you borrow on a 30-year fixed loan. Measured from Freddie Mac's 7.40% average (as of October 8, 2026), going to 6.40% trims $201 a month on a $300,000 loan and $301 on $450,000.
That's the monthly answer. The harder question is whether chasing that point through a refinance pays off once closing costs and a fresh 30-year clock enter the math. We ran the numbers for both, including two traps the usual "1% rule" articles skip.
Monthly principal and interest on a $300,000 30-year fixed mortgage at 7.40% vs 6.40%, as of October 2026. AI-generated image
What one point is worth on a $300,000 and $450,000 loan
On a 30-year fixed mortgage, cutting the rate from 7.40% to 6.40% lowers principal and interest by $200.62 a month on $300,000 and $300.93 on $450,000. Over the full term, that adds up to roughly $72,000 and $108,000 less interest paid, based on our own amortization math as of October 2026.
Here's the full table. All figures are principal and interest only, with no taxes, insurance or PMI.
| Loan amount | 7.40% (Freddie Mac avg, Oct 8, 2026) | 6.40% | Monthly savings | 30-year interest saved |
|---|---|---|---|---|
| $300,000 | $2,077.14 | $1,876.52 | $200.62 | ≈ $72,224 |
| $450,000 | $3,115.71 | $2,814.78 | $300.93 | ≈ $108,336 |
The starting point matters. Freddie Mac's Primary Mortgage Market Survey put the 30-year average at 7.40% on October 8, up from 7.28% a week earlier and 6.30% a year ago. The 15-year average was 6.73%. Rates also climbed fast: Trading Economics' summary of Freddie Mac releases shows 6.71% on September 3, which means roughly 0.7 of a point was added in about five weeks.
One caveat on that 7.40%. The survey covers conventional, conforming purchase loans on owner-occupied homes, with 20% down and strong credit. Your quote may differ. Both loan sizes above sit well under the 2026 conforming loan limit of $832,750 announced by the FHFA, so they're the kind of loans the survey actually tracks.
Want to check our arithmetic? The standard payment formula is M = P × i / (1 − (1 + i)^−n), where i is the annual rate divided by 12 and n is 360 months.
As a sanity check, a CFPB Data Spotlight on changing mortgage rates says a fall from 7.25% to 6.5% saves about $200 a month on $400,000. Our formula gives $200.44. Same answer.
Does the starting rate change the savings?
The starting rate changes the dollar value of one point only slightly. A drop from 7.40% to 6.40% saves $200.62 a month on $300,000, while a drop from 6.00% to 5.00% saves $188.19. Higher starting rates make each point a little more valuable, but the $67-per-$100,000 rule holds within a few dollars.
| Rate move | $300K monthly savings | $450K monthly savings |
|---|---|---|
| 7.40% → 6.40% | $200.62 | $300.93 |
| 7.00% → 6.00% | $197.26 | $295.88 |
| 6.00% → 5.00% | $188.19 | $282.28 |
Half a point is worth about half as much. Going from 7.40% to 6.90% saves $101.34 a month on $300,000 and $152.01 on $450,000.
The 15-year loan behaves differently. Dropping its rate from 6.73% to 5.73% saves $163.38 a month on $300,000, less than the 30-year figure, because more of each 15-year payment goes to principal rather than interest. Fewer interest dollars, less to cut.
Is it worth refinancing for 1 percent?
Refinancing for a one-point drop pays off only if you keep the loan longer than the break-even point: total closing costs divided by monthly savings. On a $300,000 loan two years in, costs of 2% to 5% take roughly 25 to 62 months to recover with a new 30-year loan. Sell or refinance again before then and you lose money.
Closing costs are the swing factor, and estimates vary. Freddie Mac's refinancing cost guide tells borrowers to expect 3% to 6% of the loan amount, covering origination, appraisal, title, recording and similar fees. LendingTree puts the range at 2% to 5%.
For a reference point, the CFPB reported total loan costs of about $6,000 in 2022, a figure that mixes purchase loans and refinances.
We modeled a borrower who took out $300,000 at 7.40%, made 24 payments, and refinanced the remaining balance of about $294,144 at 6.40%.
| Closing costs | Amount | Break-even, new 30-year loan ($237.25/mo saved) | Break-even, keep 28 years left ($192.91/mo saved) |
|---|---|---|---|
| 2% | ≈ $5,883 | 24.8 months | 30.5 months |
| 3% | ≈ $8,824 | 37.2 months | 45.7 months |
| 5% | ≈ $14,707 | 62.0 months | 76.2 months |
Refinance break-even months on a $294,144 balance at 2%, 3% and 5% closing costs, 7.40% to 6.40%. AI-generated image
Loan size changes less than you'd think. When costs are a percentage of the loan, a $450,000 borrower hits break-even in exactly the same number of months. A flat fee is different: $5,000 in costs is recovered in 21.1 months on the $300,000 loan but just 14.0 months on $450,000.
What about "no-closing-cost" offers? Those typically come with a higher rate or roll the fees into the balance. Freddie Mac's own wording is blunt: "there is no such thing as a free loan."
The 30-year reset that shrinks the real savings
Refinancing into a brand-new 30-year loan makes the monthly savings look bigger while cutting the lifetime savings almost in half. In our $300,000 example, resetting saves $237.25 a month but only about $35,600 in total payments, versus about $64,800 when the new loan keeps the original 28 years remaining.
Why the gap? The reset spreads the balance over two extra years, so part of that lower payment comes from stretching the term rather than from the lower rate.
The CFPB's refinancing handout for homeowners makes the same point: check how much of a payment cut is the rate and how much is the longer term. It also notes that a custom term, such as 22 years, is often available instead of a reset to 30.
| $300,000 loan, 2 years in | Remaining total paid* |
|---|---|
| Keep current 7.40% loan | ≈ $697,919 |
| Refinance to 6.40%, new 30-year term | ≈ $662,360 |
| Refinance to 6.40%, 28 years left | ≈ $633,101 |
*Principal and interest only; closing costs not included.
Our read: the monthly number is the one lenders lead with, and it's the less useful one. If you're comparing offers, the total-paid line tells you more.
Next steps
- The quick estimate: your balance in $100,000s times about $67 gives the monthly effect of one point, and quoted closing costs divided by that figure give break-even months.
- What a lender quote usually needs: current balance, rate, months remaining and any prepayment penalty terms. The CFPB suggests comparing two quotes, one with points and one with lender credits.
- Timing: under CFPB rules a Loan Estimate is due within 3 business days of an application, and the Closing Disclosure at least 3 business days before closing.
Related on The Daily Sift: High-Yield Savings Interest Calculation: APY vs APR on $10K · CD Rates vs Treasury Yields: What 2026 Savers Get Now
Sources
- Freddie Mac — Primary Mortgage Market Survey (PMMS)
- Freddie Mac My Home — Costs of refinancing
- CFPB — Data Spotlight: The impact of changing mortgage interest rates
- CFPB — Refinancing handout for homeowners
- CFPB — Mortgage report on closing costs (2023 press release)
This article is for general information about mortgage rates and refinancing costs only and is not investment, financial, or tax advice. Figures such as rates, returns, and rules are as of October 14, 2026 and may change. Any financial decision is your own responsibility; please verify with official sources or a licensed professional before acting.