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Published: Dec 01, 2020 7 min read
Money; Getty Images

New data shows pending home sales dropped slightly from September to October, but were well above 2019 levels. With inventory and mortgage rates low, price growth is still growing and is likely to continue well into 2021.

Today's Mortgage Rates

The average rate for a 30-year fixed-rate purchase mortgage was 3.305% on Monday. Last Wednesday, before the Thanksgiving holiday, the average rate was 3.272%.

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 December 1, 2020
Loan type Average Rate
30-Year Fixed Loan 3.305%
15-Year Fixed Loan 2.426%
30-Year FHA Loan 3.101%
30-Year VA Loan 3.239%
30-Year Jumbo Loan 3.64%
Source: Money | Date: Nov. 30, 2020 | Rates assume a credit score of 700

How do I get the best mortgage rates?

Mortgage rates vary from state to state. On Monday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.061%. People looking for mortgages in Nevada saw the highest average rate at 3.665%.

Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.868%, while those with credit of 620 or below were shown rates of 4.689%.

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 2.72% with 0.7 points paid for the week ending November 25. That's steady with a week earlier when rates hit the 13th record low of the year. The mortgage purchaser's weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.

Today's Mortgage Refinance Rates

Money's survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.499% on Monday. Last December, the average mortgage rate (including fees) was 3.88%.

Refinance Rates for December 1, 2020
Loan type Average Rate
30-Year Fixed Loan 3.499%
15-Year Fixed Loan 2.793%
30-Year FHA Loan 3.544%
30-Year VA Loan 3.658%
30-Year Jumbo Loan 3.58%
Source: Money | Date: Nov. 30, 2020 | Rates assume a credit score of 740

A homeowner with a $200,000 mortgage balance currently paying 3.88% on a 30-year could potentially cut their monthly payment from about $940 to about $700 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?

The housing market may finally be slowing down as pending home sales for the month of October came in about 1% lower than in September, according to the National Association of Realtors. Despite the month-over-month decline, pending sales were well above last year's sales with contract signings up over 20% from last October.

October marked the second month in a row where there was a slight drop in the NAR's Pending Home Sales Index. However, the index was at 128.9 points, well above the 100 point baseline (equal to contract activity in 2001). The slight slowing of purchase activity comes at a time when both housing inventory and mortgage rates are at a historic low.

"The combination of these factors — scarce housing and low rates — plus very strong demand has pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers, who don't have the luxury of using housing equity from a sale to use as a down payment," said Lawrence Yun, NAR's chief economist. "Work-from-home flexibility has also increased the demand for both primary and secondary homes."

Yun went on to add that increasing home prices caused by the housing shortage may start to affect affordability for buyers who are either just entering the market or still searching for a new home.

Unfortunately, there wasn't much relief for buyers looking for affordable homes in October. According to CoreLogic's Home Price Index, home prices increased by more than 7% over October 2019, the fastest annual price appreciation since April of 2014. Month-over-month, home prices increased by about 1% over September.

Increased pressure may be placed on the market over the next few months as a surge in COVID-19 infections may deter some sellers from entering the market, despite high home values. However, new home construction picked up in October, and builder confidence reached an all-time high for the third month in a row, leading CoreLogic to forecast home price growth to slow to 1.9% by October of 2021 as supply starts to catch up with demand.

Expert Mortgage Prediction of the Week

Expert views on what comes next.

— NAR's Yun, for more on the winter market: Why This Winter Should Be One of the Best Ever for Home Sales

Bottom line:

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Rates are subject to change. All information provided here is accurate as of the publish date.