Here Are Today's Best Mortgage & Refinance Rates for October 5, 2020

The average rate for a 30-year fixed-rate purchase mortgage was 3.402% Friday. The average rate for a 30-year refinance was 4.291%.

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

Mortgage rates vary from state to state. On Friday, borrowers in Alaska were quoted the lowest mortgage rates — at 3.172%. People looking for mortgages in Nevada saw the highest average rate at 3.651%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.957%, while those with credit of 640 or below were shown rates of 4.729% — a 1.772 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 2.88% with 0.8 points paid for the week ending October 1. 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 3.579% on Friday. Last October, the average mortgage rate (including fees) was 3.859%.

A homeowner with a $200,000 mortgage balance currently paying 3.859% on a 30-year loan could potentially cut their monthly payment from $939 to $908 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 sale of single-family homes has led the real estate rebound as people look for more space to socially distance, but an worsening inventory shortage is pushing home prices higher and may lead to a resurgence in the sale of condos.

Condo prices increased 5.4% year-over-year during the month of August, bringing the median price to $266,000, according to a report by online real estate broker Redfin. By comparison, the median price of single-family homes increased by 11.9% to $343,000, the largest price growth gap between the two since 2014.

“Home prices have been growing across all property types, as record-low mortgage rates have suddenly equipped Americans with more buying power. But condos have experienced relatively modest price growth because the coronavirus pandemic has motivated many homebuyers to instead bid on single-family homes, which typically offer more space and privacy,” said Tayor Marr, Redfin's lead economist. “But if prices of single-family homes continue to surge to unsustainable levels, condos may make a comeback, as they could become the only type of home that buyers in some areas can afford while also avoiding intense bidding wars.”

Redfin saw a decline in saved searches for single-family homes from 37% in July to 34% in August, which may be a sign that potential buyers are losing interest in this type of property but could also mean that the severe lack of inventory in this category is leading buyers to look at other options. Year-over-year, the total number of active listings is down 26% for single-family homes while the number of listings for condos is up 3.6%. New listings for condos are up 18.4%, while single-family homes are only up 1.8%.

Condo sales are rising, increasing 11.8% during August compared to a 10.8% increase in the sale of single-family homes. However, the single-family are selling faster (30 days on average) than condos (36 days) and lead to more bidding wars — 56.6% compared to 41.3%.

Mortgage Term of the Week

Understanding the lingo can be key to avoiding mistakes when you are buying a home or refinancing your mortgage. For more read: Everything You Need to Know About Mortgage Rates in 2020

Buydown: Refers to money someone (like a builder or property seller) advances to a purchaser to reduce their monthly payments, either for a specific period of time or the entire term of the loan.

Bottom line:

Procrastinators, It's Not Too Late to Refinance Your Mortgage and Save Thousands

Everyone Wants to Buy a House Right Now. 9 Experts Predict How Long Demand Will Soar

Home Equity Is Soaring — if You're Tempted to Borrow Against Your Home, Read This First