Today's Mortgage and Refinance Rates: January 30 & 31 | Rates Hover Near 3%

Interest rates trended down this week as the economic recovery has seemingly stalled. Existing and new home sales were up at the end of 2020, with homebuyer interest remaining at high levels. While overall inventory continued to decline, the supply of newly built homes increased from a summertime low.

Today’s Mortgage Rates: 30-Year Fixed Loans, 15-Year Fixed Loans, and More

Source: Money | Date: Jan. 28, 2021 | Rates assume a credit score of 700

The average rate on a 30-year fixed-rate mortgage was 3.053% on Thursday — up from 3.029% Wednesday.

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

Our daily rates are generally higher than the weekly benchmark rate published by Freddie Mac, which are for buyers with the highest credit scores.

Money's daily mortgage data also shows that borrowers with the highest credit scores — 740 and above — were offered a rate of 2.855% on average. People will lower credit scores — 620 or below — were shown rates of 4.141%.

How do I get the lowest mortgage rate?

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.

Mortgage rates vary also from state-to-state. On Thursday, borrowers in Illinois were quoted the lowest mortgage rates — at 2.993%. People looking for mortgages in Nevada saw the highest average rate at 3.161%.

Today's Refinance Rates

Today's survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.139% on Thursday. In January 2020, the average mortgage rate (including fees) was around 3.8%.

Source: Money | Date: Jan. 28, 2021 | Rates assume a credit score of 740

Real Estate and Mortgage Rate News This Week

Freddie Mac mortgage rates ticked down again

Mortgage rates decreased again this week, with the benchmark rate on a 30-year fixed rate mortgage dropping to 2.73%, according to Freddie Mac. The previous week it averaged 2.77%. The downward slide is being attributed to the economic strain of the COVID-19 pandemic as well as the market's reaction to the new administration.

For home loan borrowers, decreasing interest rates are a double-edged sword. They make mortgage payments more affordable, but also drive prices higher, which will affect affordability for first-time homebuyers in particular.

Existing home sales increased

In 2020, existing home sales saw a year-over-year increase of 22%, making last year the biggest for home sales since 2006. According to the National Association of Realtors, 5.64 million existing homes were sold last year. However, as home sales increased, inventory decreased. There were a total of 1.07 million homes available for sale by the end of December, bringing inventory down to a record low of 1.9 month supply at the current pace of sales. Six months is considered healthy.

With housing inventory so low, buyers should expect increased competition for available homes.

Sales of newly built homes were also up

Sales of newly built homes were up in December, increasing 1.6% over the previous month, according to the U.S. Census Bureau. The increase represents an annually adjusted rate of 842,000 units sold compared to 829,000 units in November. When compared to December 2019 the increase is even more dramatic, with home sales up 15.5%.

New home inventory also saw an increase, with 302,000 new units available on the market in December. This represents a 4.3 month supply of newly-built homes compared to a low of 3.5 months in mid-summer. Any increase in housing supply is welcome as increased inventory could help fill buyer demand and slow down the growth of home prices.

Homebuying is still on the radar for many Americans

One-in-six Americans are thinking about purchasing a home within the next two years, according to a recent survey commissioned by MyWalletJoy. Among future buyers between the ages of 18 to 34, the percentage is even higher at 28%. The housing market has remained resilient in the face of the COVID-19 pandemic, with record low interest rates luring buyers into the market. Continued interest in homes indicates the next year could be just as competitive as 2020.

Mortgage applications slide

The overall volume of home loan applications decreased this week, according to the Mortgage Bankers Association. Total applications were down by 4.1% from a week earlier, with purchase loans decreasing by 4% and refinance loans down by 5%. Despite the declines, both purchase and refi loans were much higher than year-ago levels, up 16% and 83% respectively.

Loan applications have been seesawing the last few weeks with mortgage rates. Applications first rose sharply when rates hit a record-low of 2.65%, but then started trending downward. If rates continue to slide or remain close to record lows, applications could see more consistent gains.

Bottom line:

9 Steps to Take Now That Will Prepare You for Buying a Home in 2021

Money's 2021 Real Estate Outlook: What to Expect for Mortgage Rates, Home Prices and More

Current Mortgage Rates: 30-Year Mortgage Rates Hit a New Low

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