After last week's electoral uncertainty pushed interest rates down, mortgage rates made a quick rebound yesterday, increasing by nearly 0.3 percentage points from Friday's average. Still, rates remain historically low and represent a great opportunity for first-time buyers to find their dream home or for those who haven't refinanced yet to lower their monthly payments.
Meanwhile, more homeowners are exiting forbearance plans as recent economic indicators, including higher than expected employment numbers, point to a continuing recovery.
The average rate for a 30-year fixed-rate purchase mortgage was 3.708% on Monday. The average rate for a 30-year refinance was 4.472%.
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 November 9, 2020|
Mortgage rates vary from state to state. On Monday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.375%. People looking for mortgages in Colorado saw the highest average rate at 3.893%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 3.08%, while those with credit of 640 or below were shown rates of 4.766% — a 1.686 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 2.78% with 0.6 points paid for the week ending November 5, a new record low and the twelfth time this year interest rates have set a historic 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 3.889% on Monday. Last November, the average mortgage rate (including fees) was 3.874%.
|30-year fixed-rate mortgage refi|
|Rate of November 9, 2020|
A homeowner with a $200,000 mortgage balance currently paying 3.874% on a 30-year would increase their monthly payment from $940 to $942 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?
According to the Mortgage Bankers Association, the number of mortgage loans participating in forbearance plans continues to decline, dropping 16 basis points to 5.67% of all loans. The MBA estimates that there are 2.8 million homeowners still taking advantage of the payment deferral plans for the week ending November 1.
The share of Fannie Mae and Freddie Mac loans enjoyed a 22nd consecutive week of improvement, dropping by 17 basis points to 3.49%. Ginnie Mae loans saw another week of declines, dropping 18 basis points to 7.95%. While private-label securities and portfolio loans saw a decline of 12 basis points. Of the loans still in forbearance, 22.5% are in the initial stage, 75.99% are in an extension phase, and 1.76% are forbearance re-entries.
"A recovering job market, coupled with a strong housing market, is providing the support needed for many homeowners to get back on their feet. However, the data continue to show that servicers are still having difficulties reaching borrowers who have reached the six-month point of their forbearance period," said Mike Fratantoni, the MBA's chief economist. "Servicers are required to get borrowers' consent to extend forbearance beyond six months. Homeowners who continue to be impacted by hardships related to the pandemic should contact their servicer."
Of the loans leaving forbearance plans between June and November, 31.6% were homeowners who continued to make their monthly mortgage payments while they were in the plan. Another 23.6% resulted in a payment deferral or partial claim, while nearly 17% had their loans reinstated — meaning they paid all due amounts when they left forbearance.
Some homeowners — about 12% — exited the plan without having made their monthly payments and without a payment mitigation plan in place. The remaining homeowners repaid their mortgages by either refinancing or selling their home, modifying their mortgage, establishing repayment plans, or other options.
Mortgage Prediction of the Week
Expert views on what comes next.
Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company, on the increasing risk of foreclosures:
For more information on what experts think about the future of foreclosures, read: Are We Heading for Another Foreclosure Crisis? 9 Housing Experts Share Their Predictions.