Homeowners are looking for more than just larger homes and bigger yards. How a local government has responded to the spread of the COVID-19 virus is also having an impact on where people want to live, as are local school shutdown policies and even political affiliation.
Today's Mortgage Rates
The average rate for a 30-year fixed-rate purchase mortgage was 3.354% on Friday. The average rate for a 30-year refinance was 4.28%.
Money's 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.
|Mortgage Rates for November 16, 2020|
|Loan type||Average Rate|
|30-Year Fixed Loan||3.354%|
|15-Year Fixed Loan||2.46%|
|30-Year FHA Loan||3.254%|
|30-Year VA Loan||3.337%|
|30-Year Jumbo Loan||3.698%|
Source: Money | Date: Nov. 13, 2020 | Rates Assume a Credit Score of 700
Mortgage rates vary from state to state. On Friday, borrowers in North Carolina were quoted the lowest mortgage rates — at 3.194%. People looking for mortgages in Nevada saw the highest average rate at 3.697%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.928%, while those with credit of 640 or below were shown rates of 4.651% — a 1.723 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 lenders 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 2.84% with 0.7 points paid for the week ending November 12, a 0.6 percentage point jump from last week's historic low of 2.78%. The mortgage purchaser's weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.
Today's Refinance Rates
Money's survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.598% on Friday. Last November, the average mortgage rate (including fees) was 3.874%.
|Refinance Rates for November 16, 2020|
|Loan type||Average Rate|
|30-Year Fixed Loan||3.598%|
|15-Year Fixed Loan||2.828%|
|30-Year FHA Loan||3.843%|
|30-Year VA Loan||3.885%|
|30-Year Jumbo Loan||3.657%|
Source: Money | Date: Nov. 12, 2020 | Rates Assume a Credit Score of 740
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 $909 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 today?
Has your local government's response to COVID-19 made you reconsider whether where you live now is the right place for you? If it has, you're not alone.
About 26% of respondents in a recent Redfin survey say they want to move to a different area or reconsidered where they want to move to because of the way the local authorities have responded to the pandemic. By contrast, 21% of those surveyed say the way their government has responded to the virus has made them like where they live.
“2020 has made Americans realize just how much power their local governments have over their way of life,” said Redfin chief economist Daryl Fairweather. “If residents of a certain area feel their local rules are too lax or too strict, they may want to move somewhere where the local leadership is more in line with their personal beliefs. And the rise in remote work means some people can move to a different city or state without changing jobs, removing what’s usually a major barrier to relocation. Americans moving to areas more aligned with their political views could make certain counties and states more liberal or more conservative.”
The recent surge in COVID cases is also making homeowners shy away from densely populated areas. More than 50% of the survey respondents said they would be uncomfortable moving to a big city with a high population density, up from 39% prior to the pandemic.
Other situations impacting people's decisions on whether to stay put or move are school shutdowns, with 19% of those surveyed saying the shutdowns have made them want to move away from their current home or change the area where they want to move to. Meanwhile, 42% of respondents said they would be hesitant to move to an area where they would be in the political minority.
In unrelated news, Moderna announced today that the clinical trials of their COVID-19 vaccine show it is 94.5% effective against the virus, and the company plans to ask the federal government for clearance by early December. This is the second vaccine to show promising results in the last two weeks. On November 9, Pfizer announced its vaccine was 90% effective against the virus, causing interest rates to jump slightly. How today's news affects interest rates moving forward remains to be seen.
Mortgage Term of the Week
Conforming Loan: These loans “conform” to Fannie Mae and Freddie Mac's loan-buying criteria including a maximum purchase price, as well as down payment and credit requirements. For 2020, Fannie and Freddie will buy loans with balance up to $510,400 for most of the country. Some expensive real estate markets have higher conforming loan limits.
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.