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By Leslie Cook
October 20, 2020

The average rate for a 30-year fixed-rate purchase mortgage was 3.47% on Monday. The average rate for a 30-year refinance was 4.372%.

Money’s current mortgage rates include data from over 8,000 lenders across the United States and are updated daily. These rates include discount 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
3.47%
Rate of October 19, 2020
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View Rates for January 16, 2021

Mortgage rates vary from state to state. On Monday, borrowers in Wisconsin were quoted the lowest mortgage rates — at 3.31%. People looking for mortgages in Colorado saw the highest average rate at 3.73%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 3.018%, while those with credit of 640 or below were shown rates of 4.817% — a 1.799 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 3.645% on Monday. Last October, the average mortgage rate (including fees) was 3.859%.

30-year fixed-rate mortgage refi
3.645%
Rate of October 19, 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 $914 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?

According to Redfin, the national median home price rose by more than 14% during the month of September to an average of $333,900. That’s the largest year-over-year increase since the real estate brokerage started tracking prices in 2012. Prices rose in all 87 metro areas tracked by company.

The largest increase occurred in Bridgeport, Connecticut, rising a little over 33%. Memphis, Tennessee followed, with an increase of just under 30%. The smallest increases occurred in Honolulu — up 5.3% — and Milwaukee with a 6.1% increase.

“2020 will be known for a lot of things and a record-breaking year for real estate will certainly be one of its more unexpected legacies,” said Daryl Fairweather, Redfin’s chief economist. “Demand typically abates in late summer and early fall, but seasonal patterns don’t stand a chance against the other factors motivating homebuyers this year. Homebuyers are seeking spacious homes in areas outside big cities to accommodate homeschooling and remote work. That plus low mortgage rates and record-low inventory are fueling historically high price growth and the fastest market in recent history.”

The number of home sales continued their torrid pace, rising by 17.6% in September, the largest year-over-year increase Redfin has seen. All but two of the largest metro areas covered in the survey saw yearly increases. The exceptions were Buffalo, New York and Memphis, which saw annual decreases of 6.7% and 1.8% respectively.

Inventory continues to be the main challenge. Active listings decreased 22% year-over-year to the lowest level on record for the month of September, which marked 13 straight months of inventory declines.

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Home builders are finding opportunity in the severe lack of inventory. Builder sentiment reached a new high of 85 for the month of October, according to the National Association of Home Builders Home Market Index. Scores over 50 mean more builders viewing conditions as good than poor. The index crossed 80 for the first time in September. All three components of the index — current sales conditions, sales expectations for the next six months and prospective buyer — either increased or remained steady in October.

Elsewhere, the number of mortgage loans in forbearance had another significant drop, according to the Mortgage Bankers Association, falling below 6% of all loans for the first time since the pandemic began. The share of loans in the payment deferral program went down by 40 basis points to 5.92% of mortgage loans for the week ending October 11, with an estimated 3 million homeowners still taking advantage of the plans.

The were decreases across all types of mortgage loans eligible for forbearance, with the share of FannieMae and Freddie Mac loans continuing a 19-week trending of declines with a 26 basis point reduction. The largest decrease occurred in the share of portfolio and private-label securities, which dropped 120 basis points. The share of Ginnie Mae loans was down 13 basis points.

“The steady improvement for Fannie Mae and Freddie Mac loans highlights the improvement in some segments of the job market and broader economy,” said Mike Fratantoni, chief economist for the MBA. “The slower decline for Ginnie Mae loans continues to show that this improvement has not been uniform, and that many are still struggling to regain their footing.”

The large decrease is largely due to the expiration of the original six-month forbearance term provided by the CARES Act. Homeowners with federally backed loans can request a six-month extension, but they must contact their loan servicer and request it. Otherwise, homeowners will exit the payment deferral program regardless of whether they are current or behind on their mortgage.

Mortgage Prediction of the Week

Expert views on what comes next.

Robert Dietz, chief economist for the National Association of Home Builders, on how long home prices will continue to rise:

To learn more about rising home prices, read: How Long Will Home Prices Continue to Rise? 8 Experts Weigh In.

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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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