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By Leslie Cook
October 19, 2020

The average rate for a 30-year fixed-rate purchase mortgage was 3.45% on Friday. The average rate for a 30-year refinance was 4.369%.

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
3.45%
Rate of October 16, 2020
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View Rates for January 15, 2021

Mortgage rates vary from state to state. On Friday, borrowers in Wisconsin were quoted the lowest mortgage rates — at 3.257%. People looking for mortgages in Nevada saw the highest average rate at 3.76%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 3%, while those with credit of 640 or below were shown rates of 4.811% — a 1.811 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 2.81% with 0.6 points paid for the week ending October 15, a new record low. 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 3.671% on Friday. Last October, the average mortgage rate (including fees) was 3.859%.

30-year fixed-rate mortgage refi
3.671%
Rate of October 16, 2020

A homeowner with a $200,000 mortgage balance currently paying 3.859% on a 30-year could potentially cut their monthly payment from $939 to $917 by financing at the current lower 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).

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What else is happening in the housing market right now?

Home values are growing at the fastest pace in years as home sales continues at a record-setting pace. Homes are worth 5.8% more than they were a year ago, according to real estate platform Zillow, with the typical home value reaching $259,906 in September.

Every major city has experience home value growth for three-consecutive months. September’s increases ranged from 0.5% in Orlando to 1.5% in San Jose. Year-over-year gains were more significant. The largest price growth occurred in Phoenix, which saw annual growth of 11.7%, followed by San Jose at 11.5% and Seattle at 10.7%.

“Home values are accelerating more quickly than any time since 2014, marking a sharp turnaround from a market briefly put on hold during the outbreak of the pandemic this spring,” said Jeff Tucker, senior economist at Zillow. “The historic shortage of homes available for sale has boosted home price appreciation, now that buyers are waging bidding wars for the few options left. Builders are racing to fill the gap, and we may see more listings next year if nervous sellers become reassured, but this shortage of homes is so deep that any reversal would take at least several months.”

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Meanwhile, list and sale prices have been growing even faster than overall home values. Median list prices was up 11.6% year-over-year for the week ending October 10. Median sales prices were up 10.2% year-over-year for the week ending August 29, the most recent data available. High demand has led to an inventory deficit of 36.4% from last year.

Zillow is forecasting that home values will continue to rise for the remainder of the year, with seasonally-adjusted home values increasing an additional 2.9% by the end of the year and by 7% next year.

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Bottom line:

The Home Buyer’s Dilemma: As Mortgage Rates Fall, House Prices Soar out of Reach

The Overlooked Reason It’s so Hard to Buy a Home in 2020

Bidding Wars Are Back. Here’s How to Win Your Dream Home

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