Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

Published: Jan 25, 2021 7 min read
Money; Getty Images

Existing home sales increased in December as the housing market ended the year on a high note. Overall, more homes were sold in 2020 than in any year since 2006.

The average interest ending last week on a downward trend, dropping 0.19 percentage points.

Today's Mortgage Rates

The average interest rate on a 30-year fixed-rate mortgage was 3.088% on Friday — down from 3.107% on Thursday.

Mortgage Rate Chart
Loan type Average Rate
30-Year Fixed Loan 3.088%
15-Year Fixed Loan 2.322%
30-Year FHA Loan 2.845%
30-Year VA Loan 2.885%
30-Year Jumbo Loan 3.706%
Source: Money | Date: Jan. 22, 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.

Find your actual rate at Quicken Loans
Click below to get started and see your rate today
View Rates for December 08, 2023

How do I get the best mortgage rates?

Mortgage rates vary from state-to-state. On Friday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.033%. People looking for mortgages in Nevada saw the highest average rate at 3.198%.

Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.888%, while those with credit of 620 or below were shown rates of 4.111%.

You may be able to negotiate a better mortgage 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.) Lately, some lenders have been 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 3.168% on Friday. 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 3.168%
15-Year Fixed Loan 2.583%
30-Year FHA Loan 3.32%
30-Year VA Loan 3.364%
30-Year Jumbo Loan 3.579%
Source: Money | Date: Jan. 22, 2021 | Rates assume a credit score of 740

What else is happening in the housing market today?

According to the National Association of Realtors, 5.64 million existing homes were sold last year. That was 22% higher than in 2019 and made 2020 the biggest year for home sales since 2006. On a seasonally adjusted basis sales look even stronger, selling at an annual rate of 6.76 million — up 0.7% from the previous month.

The housing market managed to have the most robust year since the Great Recession despite the challenges presented by the COVID-19 pandemic. The Federal Reserve's decision to cut short-term interest rates to near-zero sent mortgage rates to a series of record lows throughout the year, helping to fuel the home-buying frenzy.

Lawrence Yun, NAR's chief economist, expects this year to be just as hot.

"What's even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market," said Yun. "Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution."

However, housing supply continues to be a major roadblock for buyers. The total inventory of homes for sale in December was 1.07 million units, down by more than 16% from November. There is a record low of unsold inventory at a 1.9 month supply — meaning inventory would be depleted in less than 60 days at the current pace of sales. By comparison, there was a 3 month supply in December 2019. Six months is considered healthy.

Yun noted that builders have increased construction, as housing starts in December reached an annual rate of 1.7 million homes. However, he went on to add that "it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand."

The pace of sale remained brisk, with homes staying on the market for an average of 21 days. According to the NAR, 70% of homes sold in December were on the market for less than a month.

As a result of high demand, low mortgage rates, and lack of supply, the median existing-home price rose to $309,800, an increase of nearly 13% from December 2019.

Mortgage Term of the Week

Understanding the lingo can be key to avoiding mistakes when you are buying a home or refinancing your mortgage. For more read: Everything You Need to Know About Mortgage Rates in 2020.

Underwriting: The process whereby a lender evaluates a loan application to determine if it should be approved. Lenders look at credit score, income, assets, liabilities, and the appraisal of the home being bought, among other information.

Bottom line:

Qualifying for a Mortgage Is Surprisingly Difficult Right Now

A Key Indicator Suggests Mortgage Rates' Epic Decline May Soon End

As Prices Soar, 6 Tricks for Finding a House You Can Actually Afford

Rates are subject to change. All information provided here is accurate as of the publish date.