Today's Best Mortgage & Refinance Rates for August 13, 2020

Buyers looking to take advantage of historically low interest rates could soon find more options as the number of new listings hitting the market is starting to show improvement. However, homeowners looking to refinance may face higher costs as Fannie and Freddie add a new fee.

According to Realtor.com's Weekly Recovery Report, new listing growth has surpassed January 2020 levels during the week of August 8, indicating that four major areas of housing activity—new listings, housing demand, asking price and pace of sales—have exceeded pre-COVID levels.

Overall, the Recovery Index saw a 1.9 point increase week-over-week, reaching a level of 105.6 (100 being the baseline). New listings reached a level of 101.7 points, registering above January levels for the first time. While the number of new listings on the market has improved, it is still 6% below the year ago level and one week does not make a trend. A continuing shortage of homes for sale is leading to a highly competitive market, with homes selling four times faster and median home prices rising 9.9% year-over-year.

"Seller confidence has been improving gradually after reaching its bottom in mid-April, and now it appears to have reached an important recovery milestone," said Javier Vivas, director of economic research for Realtor.com. "After five long months, sellers are back in the housing market; while encouraging, the improvement to new listings is only the first step in the long road to solving low inventory issues keeping many buyers at bay."

Meanwhile, some homeowners hoping to refinance may face higher rates, as government-sponsored enterprises Freddie Mac and Fannie Mae announced a New Adverse Market Refinance fee the will take effect on September 1. The fee will add 0.5% to most mortgage refinances, particularly high loan-to-value mortgages. Industry observers believe this new fee will lead to increased interest rates and cost homeowners an additional $1,400.

Wednesday's "announcement by the GSE's flies in the face of the administrations recent executive actions urging federal agencies to take all measures within their authorities to support struggling homeowners," said Bob Broeksmit, CEO of the Mortgage Bankers Association, reacting to the news. "The housing market has been able to withstand many of the most severe effects of the COVID-19 pandemic. The recent refinance activity has not only helped homeowners lower their monthly payments, but it is also reducing risk to the GSEs and taxpayers."

"This announcement is bad for our nation's homeowners and the nascent economic recovery. We strongly urge [Federal Housing Finance Agency], which had to approve this policy, to withdraw this ill-timed, misguided directive," added Broeksmit.

What are people paying for mortgages right now?

Borrowers with 700 credit scores were charged an average of 3.624% to secure a 30-year fixed-rate purchase mortgage on Wednesday, according to Money's survey of over 8,000 mortgage lenders across the country. The average rate for a 30-year refinance was 4.459%.

Average Refinance Rates Today

A homeowner with excellent credit who qualifies for the lowest rates as reported by Freddie Mac can save a significant amount of money when refinancing. A year ago the average mortgage rate was 3.60%. A homeowner with a $250,000 mortgage balance paying 3.60% on a 30-year loan could cut their monthly payment from $1,137 to $1,049 by financing at today’s lower rates. (It is important to consider closing fees and that refinancing could reset the clock on your mortgage, meaning you will have to make payments longer.)

What should house hunters be watching this week?

On Friday, The U.S. Census Bureau will release data related to retail sales during the month of July. It's expected to show some improvement, though not as much of an improvement seen during May and June when lockdowns first began to ease.

What are today’s advertised rates?

Of course, mortgage rates vary widely by location and personal factors like the size of your down payment and your credit score. Here are today’s advertised mortgage rates at some of the mortgage industry’s largest lenders. (All rates are APRs. The rates you see may be different.)