Homeowners took advantage of record-low mortgage rates last week, pushing the number of refinance loan applications to the highest level since August. Homebuyers, however, took another step back. Affordability concerns have led to a decline in purchase applications over the last two-months. Meanwhile, the share of home loans that were in some stage of delinquency fell during the third quarter.
Interest rates dipped Tuesday, as the real estate market may still be stabilizing following last week's election uncertainty.
Today's Mortgage Rates
The average rate for a 30-year fixed-rate purchase mortgage was 3.675% on Tuesday. The average rate for a 30-year refinance was 4.371%.
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 10, 2020|
Mortgage rates vary from state to state. On Tuesday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.379%. People looking for mortgages in South Carolina saw the highest average rate at 3.872%. 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 4.713% — a 1.623 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 3.824% on Tuesday. Last November, the average mortgage rate (including fees) was 3.874%.
|30-year fixed-rate mortgage refi|
|Rate of November 10, 2020|
A homeowner with a $200,000 mortgage balance currently paying 3.874% on a 30-year could potentially cut their monthly payment from $940 to $935 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 total volume of mortgage applications slipped last week, decreasing 0.5% for the week ending November 6.
According to the Mortgage Bankers Association, purchase loans decreased by a seasonally adjusted 3%, the sixth decline in the last seven weeks. Refinance applications, however, increased 1% week-over-week as homeowners took advantage of record-low interest rates to reduce their monthly payments. Refinance loans made up 70% of all mortgage loan applications last week, the highest share since August.
"Homebuyer demand is still strong overall," said Joel Kan, the MBA's associate vice president of economic and industry forecasting. "However, inadequate housing supply is putting upward pressure on home prices and is impacting affordability —especially for first-time buyers and lower-income buyers."
Despite the recent cool down, purchase activity was still 16.5% higher than the same period last year, while refinance activity was 67% higher.
Another MBA report shows that the number of homes that are in some stage of delinquency decreased during the third quarter, coming in 57 basis points lower than during the second quarter. That brings the delinquency rate for one-to-four-unit residential properties down to 7.65% of all outstanding loans. Year-over-year, the delinquency rate was up by 368 basis points from the third quarter of 2019.
The share of loans that were in the early stages of delinquency — 30 days late — decreased by 48 basis points to 1.86%, the lowest rate the survey has seen since it began in 1979. The 60-day delinquency rate decreased by 113 basis points to 1.02%.
However, the 90-day delinquency rate increased by 106 basis points to 4.78%, the highest rate since the second quarter of 2010. The seriously delinquent rate — loans 90 or more days past due — reached 5.16%, the highest rate since the fourth quarter of 2013.
Thanks to the forbearance plans that were put in place earlier this year, while loan delinquencies have skyrocketed compared to last year, the number of loans in active foreclosure during the third quarter was 0.59%. That's down 9 basis points from the previous quarter and 25 basis points from last year. It remains to be seen how the end of yearlong forbearance eligibility will affect the delinquency and foreclosure rates moving forward.
"There are no guarantees that last quarter’s improvement in the delinquency rate will continue. Recent actions to combat another wave of COVID-19 cases could slow or halt the recovery in some sectors — particularly the service industries — and the passage of another stimulus package is still uncertain,” said Marina Walsh, vice president of industry analysis for the MBA. “Despite this ongoing concern, steady home-price gains and homeowner equity accumulation seen in most of the country in the last several years potentially work in favor for distressed borrowers. We continue to encourage them to reach out to their mortgage servicer as soon as possible to discuss their options.”
Quote of the Week
More great housing content from Money.
Sara Bernier, on being able to save enough money for a down payment thanks to the pandemic.
For more information on how the pandemic has led to increased savings for some Americans, read: Lockdown Converted Many Americans Into Serious Savers. Now They Have Houses to Show For It.