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Mortgages

Here Are Today's Best Mortgage & Refinance Rates for October 13, 2020

The average rate for a 30-year fixed-rate purchase mortgage was 3.882% on Monday. The average rate for a 30-year refinance was 4.544%.

Money's current mortgage rates include data from over 8,000 lenders across the United States and are updated daily. The rates include points and represent what a borrower with a 20% down payment and 700 credit scores — roughly the national average FICO score — would have been quoted.

30-year fixed-rate purchase mortgage

3.882%

Rate of October 12, 2020

Mortgage rates vary from state to state. On Monday, borrowers in Iowa were quoted the lowest mortgage rates — at 3.628%. People looking for mortgages in Georgia saw the highest average rate at 4.2%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 3.301%, while those with credit of 640 or below were shown rates of 4.91% — a 1.609 percentage-point spread.

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

Freddie Mac's widely quoted Primary Mortgage Market Survey put rates at 2.87% with 0.8 points paid for the week ending October 8. The mortgage purchaser's weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.

Refinance rates today

Money's survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.92% on Monday. Last October, the average mortgage rate (including fees) was 3.859%.

30-year fixed-rate mortgage refi

3.92%

Rate of October 12, 2020

A homeowner with a $200,000 mortgage balance currently paying 3.859% on a 30-year would be increasing their monthly payment from $939 to $946 by financing at the current rates. To determine if it's worth it to refinance your mortgage, also consider the closing fees you paid on your current mortgage, how much your new lender is charging and how long you have left on your loan term. (Our picks for the best lenders for refinancing are here).

What else is happening in the housing market right now?

The share of mortgage loans in forbearance plans dropped this past week by 49 basis points to 6.32% for the week ending October 4, according to the Mortgage Bankers Association. The drop means that there are now 3.2 million homes in the payment deferral programs, down from 3.4 million last week and a peak of 4.3 million in June.

There were decreases across the board, with the share of Fannie Mae and Freddie Mac loans in forbearance dropping for the 18th week in a row to 4.03%. Private label and portfolio loans meanwhile, dropped 33 basis points. Ginnie Mae loans, which have been slowly ticking up over the last few weeks, saw the biggest decline of all, decreasing 89 basis points from 9.16% to 8.27%.

A large number of exits from the payment deferral plans is because the original six-month forbearance period provided by the CARES Act expired and borrowers didn't contact their loan servicer to request an extension. Some expirations were also due to the borrowers' information not being available for the servicer to determine what other loss mitigation options would be appropriate. Borrowers with federally backed mortgages can request another six months of forbearance if they are still economically impacted by the COVID-19 pandemic.

"As of now, some borrowers are exiting forbearance without making contact or having a plan in place. Servicers are making outreach efforts to attempt to work with these borrowers to determine the best options for them, including an extension," said Mike Fratantoni, the MBA's chief economist. "On a more positive note, nearly two-thirds of borrowers who exited forbearance remained current on their payments, repaid their forborne payments, or moved into a payment deferral program. All of these borrowers have been able to resume — or continue — their pre-pandemic monthly payments."

In another reversal from earlier in the year, luxury home sales were 41.5% higher in third quarter of 2020 than a year earlier, according to real estate brokerage Redfin. It's the largest increase since 2013 when the broker started keeping track. By contrast, the sale of median-priced homes increased 3%, while the sale of affordable homes declined by 4.2%.

"The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn't a normal recession," said Daryl Fairweather, Redfin's chief economist. "Remote work, record-low mortgage rates, and strong stock prices during the pandemic are allowing America's wealthy families to gobble up expensive houses with home offices and big back yards in the suburbs. Meanwhile, scores of lower and middle-class Americans have lost their jobs or are still renting in the city because they're essential workers and have to commute into work, so they're unable to reap the benefits of homeownership."

The survey divided all U.S. residential properties into five groups. Three of the groups were of equal size based on Redfin's estimates of home market values, while the other two tiers represented the top 5% and the bottom 5%. The top or luxury tier represents homes with a median price of $826,700. Median priced homes averaged $259,000, while affordable homes had a median price of $178,000.

Expert Prediction of the Week

Expert views on what comes next.

James P. Gaines, chief economist at the Real Estate Center at Texas A&M University, on the housing inventory shortage:

For more on the housing market, read: When Will It Get Easier to Buy a Home? 8 Experts on the Nation's Housing Shortage

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