Today's Best Mortgage and Refinance Rates: December 18, 2020 | Rates Are Down

New single-family housing starts ticked up last month — good news in a housing market that is in dire need of new inventory.

Meanwhile, today's mortgage rates dropped by 0.48 percentage points after Freddie Mac announced a new record low.

Today's Mortgage Rates

The average rate for a 30-year fixed-rate purchase mortgage was 3.055% on Thursday. On Wednesday, the average rate was 3.103%.

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.

Source: Money | Date: Dec. 17, 2020 | Rates assume a credit score of 700

Freddie Mac's widely quoted Primary Mortgage Market Survey put rates at 2.67% with 0.7 points paid for the week ending December 17. It is the 15th new record set this year. The mortgage purchaser's weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.

How do I get the best mortgage rates?

Mortgage rates vary from state to state. On Thursday, borrowers in Washington, D.C. were quoted the lowest mortgage rates — at 2.958%. People looking for mortgages in Nevada saw the highest average rate at 3.235%.

Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 2.826%, while those with credit of 620 or below were shown rates of 4.565%.

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.

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 3.164% on Thursday. Last December, the average mortgage rate (including fees) was 3.88%.

Source: Money | Date: Dec. 17, 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 $861 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

Single-family housing starts made another strong showing in November, coming in at a seasonally adjusted annual rate of 1.19 million units, according to the U.S. Census Bureau. Housing starts last month were 0.4% higher than in October and 10% higher year-over-year. It is the highest production rate since the spring of 2007.

"The single-family construction sector appears to be leveling off at strong levels, with permits roughly at a flat level," said Robert Dietz, National Association of Home Builders chief economist. Adding, "Nonetheless, the growth for single-family construction was a true bright spot amid economic challenges in 2020."

The increase in the number of new housing starts, even though slight, is good news for a housing market that is severely understocked. Dietz points out that there is still a backlog of new construction that hasn’t even started yet. The number of permits for single-family homes was 16% higher than in November of 2019.

Housing completions, however, came in at an annualized rate of 874,000 units, a slight decrease of 0.6% from October. Rising material and regulatory costs, as well as a scarcity of skilled labor and land are keeping builders from ramping up production.

"Though single-family construction continued to be strong in November, builders are unable to keep up with demand due to rising regulatory and construction costs and shortages of lots and labor," said Chuck Fowke, chairman of the NAHB. "The incoming Biden administration needs to focus on policies to improve housing affordability and to increase supply to help housing continue to lead the economy forward," he added.

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