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Published: Dec 05, 2020 8 min read
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The housing market was mixed this week. Homebuyers continue to take advantage of record-low interest rates, but increasing home prices and low supply are putting many homes out of reach. Refinancing became a little more expensive, and more homeowners entered forbearance plans than exited. While the U.S. economy added jobs, it was less than expected.

Today's Mortgage Rates

The average rate for a 30-year fixed-rate purchase mortgage was 3.217% on Thursday. On Wednesday, the average rate was 3.283%.

Money's most recent 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 4, 2020
Loan type Average Rate
30-Year Fixed Loan 3.217%
15-Year Fixed Loan 2.428%
30-Year FHA Loan 3.194%
30-Year VA Loan 3.28%
30-Year Jumbo Loan 3.643%
Source: Money | Date: Dec. 3, 2020 | Rates assume a credit score of 700

How do I get the best mortgage rates?

Mortgage rates vary from state to state. On Thursday, borrowers in Illinois were quoted the lowest mortgage rates — at 3.039%. People looking for mortgages in Nevada saw the highest average rate at 3.534%.

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 4.704%.

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 2.71% with 0.7 points paid for the week ending December 3. This is the 14th record low set so far this year and .01 percentage point below the previous low of 2.72%. 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 most recent survey also shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.416% on Thursday. Last December, the average mortgage rate (including fees) was 3.88%.

Refinance Rates for December 4, 2020
Loan type Average Rate
30-Year Fixed Loan 3.416%
15-Year Fixed Loan 2.743%
30-Year FHA Loan 3.647%
30-Year VA Loan 3.718%
30-Year Jumbo Loan 3.591%
Source: Money | Date: Dec. 3, 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 $889 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).

5 Key Stats to Know From This Week

Interest Rates Drop

Mortgage rates set a new record low this week, with the average rate for a 30-year conventional loan dropping to 2.71%, according to Freddie Mac's Primary Mortgage Survey. It's the 14th time rates have reached historic new lows this year. Low rates have spurred a home purchasing and mortgage refinance boom throughout the year. At the current rate, a well-qualified borrower could be spending $125 less per month on a $240,000 loan compared to a year ago.

Pending Home Sales Slide While Home Prices Grow

Pending home sales dipped 1% in October, according to the National Association of Realtors. It was the second month in a row where the number of homes going to contract decreased month-over-month. Despite the decline, pending sales were still 20% higher than the same month last year. The dip in pending sales could signal a slowdown in what has been a hot real estate market this year.

Part of the reason for the decline could be increasing home prices. According to CoreLogic, sale prices were 1% higher in October than in September. Up by 7% year-over-year, October saw the fastest annual appreciation since 2014. Increasing home prices, driven by low inventory and high buyer demand, are starting to create affordability issues for many who are still searching for the right home. Rising prices are on the verge of negating any advantage a homeowner might obtain from record low rates.

Refinancing Just Got More Expensive

Refinancing a home loan will cost homeowners a little more now as Fannie Mae and Freddie Mac implemented a 0.5% "adverse market fee" on lenders. The fee, implemented on December 1, is estimated to add about $1,400 to the average mortgage refinance.

Being able to reduce monthly payments is one of the main motivating factors for refinancing a home loan. With the fee, homeowners who refi may not see as big a drop in their payments. Fannie and Freddie estimate that homeowners will lose about $15 in savings per month.

Homes in Forbearance Tick Up

The share of homeowners entering forbearance programs outpaced the number of owners exiting the program for the second week in a row. The number of loans in forbearance had been steadily declining as the economy slowly started to improve and homeowners were able to resume their mortgage payments.

The recent uptick in the share of loans entering the program could be due to the resurgence of COVID-19 infections and the new restrictions being put in place to try to contain the virus, causing a slowdown in the economic recovery. They could also be due to improved outreach on the part of lenders to get distressed homeowners into the program before it expires at the end of the year.

Employment Gains Were Lower Than Expected

The U.S. economy added 245,000 jobs in November, well below economists' expectations of 440,000 and a marked reduction from the 610,000 jobs added in October. The overall unemployment rate decreased to 6.7%, in line with expectations. Increasing infection rates have put a brake on the economic recovery ahead of the holiday season. It serves as a reminder that, while the economy has improved, there is still a long way to go before we can put the pandemic behind us. Housing has been a bright spot in the economy, but experts worry a prolonged recovery will eventually put a damper on the market.

New from Money:

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