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By Leslie Cook
January 22, 2021
Money; Getty Images

The number of new single-family housing starts and building permits issued both increased last month, good news in a market in dire need of new inventory.

The average interest rate on a 30-year fixed-rate mortgage dropped by 0.25 percentage points yesterday.

Today's Mortgage Rates

The average interest rate on a 30-year fixed-rate mortgage was 3.107% on Thursday — down from 3.132% a day earlier.

Mortgage Rate Chart
Loan type Average Rate
30-Year Fixed Loan 3.107%
15-Year Fixed Loan 2.336%
30-Year FHA Loan 2.875%
30-Year VA Loan 2.892%
30-Year Jumbo Loan 3.812%
Source: Money | Date: Jan. 21, 2021 | Rates assume a credit score of 700

Money's daily mortgage rates show the average rate offered by over 8,000 lenders across the United States the previous day. They reflect what a typical borrower with a 700 credit score might expect to pay for a home loan right now. The rates assume a 20% down payment and include discount points.

Freddie Mac's benchmark Primary Mortgage Market Survey put mortgage rates at 2.77% with 0.7 points paid for the week ending January 21. That's a slight drop of 0.02 percentage points from last week and 0.12 percentage points higher than the all-time low of 2.65%. The mortgage purchaser's weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.

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How do I get the best mortgage rates?

Mortgage rates vary from state-to-state. On Thursday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.052%. People looking for mortgages in Nevada saw the highest average rate at 3.215%.

Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.902%, while those with credit of 620 or below were shown rates of 4.141%.

You may be able to negotiate a better interest rate if you shop around or if you have other accounts with the lender. (To get started, take a look at Money's picks for the best mortgage lenders.) Currently, some lenders are hiking up advertised rates to keep demand in check, so you may be offered a lower rate if you reach out directly.

Today's Mortgage Refinance Rates

Money's survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.18% on Thursday. In January 2020, the average mortgage rate (including fees) was around 3.8%.

Mortgage Refinance Rate Chart
Loan type Average Rate
30-Year Fixed Loan 3.18%
15-Year Fixed Loan 2.596%
30-Year FHA Loan 3.341%
30-Year VA Loan 3.37%
30-Year Jumbo Loan 3.616%
Source: Money | Date: Jan. 21, 2021 | Rates assume a credit score of 740

What else is happening in the housing market today?

There's positive news on the inventory front. In December, the total number of housing starts increased 5.8% compared to the previous month, according to the U.S. Census Bureau. The entire increase was in single-family home construction, which increased by 12%. Multifamily starts, on the other hand, decreased by 13.6%.

"Strong price appreciation of single-family homes provided a signal to builders that the market is looking for more supply given the very low inventory of existing homes on the market," commented Doug Duncan, chief economist for FannieMae.

In terms of the number of housing units, December housing starts came in at an annualized rate of 1.67 million units, the highest rate since September of 2006. Single-family starts were at an annual rate of 1.34 million units while multifamily units were at a rate of 312,000.

For 2020, there were an estimated 1.4 million single-family housing starts, the highest amount since 2007.

This year is on track to be just as productive, as the number of building permits increased by 4.5% month-over-month to an annual rate of 1.7 million. Single-family permits increased by 7.8% to 1.2 million authorizations.

The increase in the number of starts and permits is welcome news for a housing market were inventory has been at a record low. Supply has been struggling to keep up with the incredibly high home buyer demand created by a combination of record-low mortgage rates and COVID-related social distancing protocols that motivated home buyers to search for larger homes in more suburban areas.

"Homebuilders have tried to keep up through a combination of signing contracts on homes not-yet-started and depleting inventories of already-built homes," noted Duncan. "We believe construction, therefore, needs to continue to catch up in order to bring the sales/inventory relationship back into balance."

Bottom line:

Qualifying for a Mortgage Is Surprisingly Difficult Right Now

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