The average rate for a 30-year fixed-rate purchase mortgage was 3.545% on Tuesday. The average rate for a 30-year refinance was 4.345%.
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|
|Rate of October 27, 2020|
Mortgage rates vary from state to state. On Tuesday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.26%. People looking for mortgages in Nevada saw the highest average rate at 3.82%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 3.027%, while those with credit of 640 or below were shown rates of 4.764% — a 1.737 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 2.80% with 0.6 points paid for the week ending October 22, 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 3.773% on Tuesday. Last October, the average mortgage rate (including fees) was 3.859%.
|30-year fixed-rate mortgage refi|
|Rate of October 27, 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 $929 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).
What else is happening in the housing market right now?
The CoreLogic/Case Shiller Home Price Index jumped 5.7% year-over-year in August, the fastest price acceleration since July 2018. The home price index is now 21% above the high prior to the Great Recession. In July, annual growth was 4.8%.
"A foregone spring home-buying season appears to have fully shifted into summer months, leading to sales volumes that are picking up speed at a time when they would normally show signs of slowing," said Selma Hepp, deputy chief economist for CoreLogic. "Not only was demand fueled by buyers planning on purchasing a home in the spring, but also by those motivated by record-low mortgage rates, desire for a larger home or desire for a vacation home as a result of the pandemic."
Western cities led the way. Phoenix saw the largest year-over-year home price increase at 9.9%, followed by Seattle, up 8.5%, and San Diego, up 7.6%. The cities with the slowest price acceleration were Chicago at 1.2% and New York, which saw a 2.8% increase.
The demand for housing, which took off in May when the pandemic related lockdowns started to ease, has remained high throughout the summer. With the trend appearing to continue into the autumn months, 2020 is on track to be the strongest year for home sales since 2006. However, supply continues to be the major hurdle. Pre-pandemic, the year started with housing inventory already down 15% from 2019. The situation has only worsened since then with inventory deficits reaching as high as 50% in some areas.
With demand so high and home prices reaching new heights, it seems that more homeowners would be lured into selling their homes, which would help alleviate the inventory shortage. However, according to a new survey by real estate site Zillow, 34% of homeowners who are considering selling their home within the next three years cite uncertainty over current conditions as the main reason for not putting their house on the market now. Another 31% cited financial uncertainty as the primary reason for not listing their home. Almost 40% believed they could get a higher price if they wait.
"Potential sellers are likely correct that home prices have yet to reach their peak, but in the long run prices tend to rise, so there's no clear 'right time' to sell," said Jeff Tucker, senior economist for Zillow. "Homeowners who feel life is uncertain right now may think they can still get a strong price if they delay selling until they have more clarity. The catch is that waiting to sell may raise the cost of a trade-up. This fall's record low mortgage rates, which make a trade-up more affordable on a monthly basis, are not guaranteed to last."
According to the report, only 1% of the total homeowners surveyed currently had their homes listed for sale. Of the 99% who aren't listing, 26% said they were concerned about not being able to find a home they could afford.
While rates for home buying and refinancing remain very favorable, mortgage loan applications seemed to be leveling off. The total volume of applications increased by 1.7% for the week ending October 23, according to the Mortgage Bankers Association. The share of purchase loans ticked up 0.2%, while refinance applications were up 3%. However, the volume of applications remained well above year-ago levels, up 24% and 80%, respectively.
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For more on the importance of the home inspection, read: More Buyers Are Skipping Home Inspections. Tales of Bats, Termites and Asbestos Should Make You Think Twice.