5 critical action steps every first-time homebuyer must know
arrow
David Bach’s
arrow First-Time Homebuyer Challenge
Get Access Now Learn More

Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

By Leslie Cook
Updated: September 17, 2020 5:59 PM ET

Borrowers with 700 credit scores were quoted an average rate of 3.559% to secure a 30-year fixed-rate purchase mortgage on Wednesday, according to Money’s survey of over 8,000 lenders across the United States. At this credit score, roughly the national average, the average rate for a 30-year refinance was 4.392%. Our rates include discount points and are for borrowers putting 20% down.

30-year fixed-rate purchase mortgage
3.559%
Rate of September 16, 2020
Ads by Ad Practitioners
Find your actual rate at Quicken Loans - click below to get started and see your rate today.
View Rates for September 27, 2020
ADVERTISEMENT

Borrowers in Washington, D.C. were quoted the lowest mortgage rates on Wednesday—at 3.415%. Those in Nevada saw the highest average rate at 3.795%. Nationwide, borrowers with the highest credit scores, 740 and above, were quoted rates averaging 3.124%, while those with credit of 640 or below were given rates of 4.925%—a 1.801 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 banks 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 2.87% with 0.8 points paid for the week ending September 17. The mortgage purchaser’s weekly survey reflects borrowers who put 20% down on conforming loans and have excellent credit.

Refinance rates today

Money’s survey also shows that the offered rate for a 30 year refinance for someone with a 740 credit score was 3.705% on Wednesday. Last September, the average mortgage rate (including fees) was 3.922%.

30-year fixed-rate mortgage refi
3.705%
Rate of September 16, 2020

A homeowner with a $200,000 mortgage balance currently paying 3.922% on a 30-year loan could potentially cut their monthly payment from $946 to $921 by financing at today’s 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).

Ads by Ad Practitioners
ADVERTISEMENT

What else is happening in the housing market right now?

Home price growth set a new high as natural disasters put a dent in the number of new listings coming onto the housing market, making it harder for homebuyers to find affordable housing.

According to Realtor.com’s Weekly Housing Report for the week ending September 12, high buyer demand and low inventory sent the median listing prices up 11.1% year-over-year, the fastest rate of growth in two years. Meanwhile, the number of new listings, which had been improving over the last couple of months was down 17% from the same time last year as wildfires in the west and hurricanes in the south made the housing inventory shortage even worse.

As a result, there is even more competition among buyers for houses already on the market. Homes are selling 11 days faster than they were a year ago, according to the report. Overall, housing inventory is down 39% from last year. Making matters potentially worse, the number of new home listings coming onto the market usually slows down during the fall, which can only increase competition and drive home prices higher.

“Inventory is so low that any disruption, such as this week’s wildfires and hurricanes, feels even more stifling for would-be home buyers. Although this year is anything but typical, we expect inventory to follow the usual seasonal pattern of tapering off in the next few weeks, but we don’t expect buyer demand to drop off as much as usual”, said Danielle Hale, chief economist for realtor.com. “Buyers hoping to take advantage of less competition during the housing off-season will likely be disappointed and could find it even more difficult to find a home.”

There may be some hope for home buyers in the form of new homes being built. Builder confidence in the single-family, newly built home market reached an all-time high in September according to the National Association of Home Builders/Wells Fargo Housing Market Index, increasing 5 points over August numbers to reach a level of 83. The previous high of 78 was originally set in December of 1998 and matched again last month.

The HMI measures builder perception of current sales of single-family homes and sales expectations for the next six months as “good,” “fair,” or “poor.” It also asks builders to rate traffic of prospective buyers as “high to very high,” “average,” or “low to very low.” Scores are then calculated to a seasonally adjusted index where a score above 50 means more builders see market conditions as good rather than poor.

While all the indices in the HMI hit record highs and the outlook for the housing market is positive, concerns about the cost of materials are a cause for concern about the continued recovery of the housing market.

“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber. More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months,” said Chuck Fowke, NAHB chairman. “That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”

Elsewhere, the Federal Reserve wrapped up its September meeting with a renewed pledge to keep the federal funds rate between 0 and 0.25%, in this case extending the period of time interest rates will remain low until inflation has risen above the central bank’s goal of 2%, which could take a few years. The Fed also renewed its commitment to purchasing mortgage backed securities to ensure market liquidity.

In response to the Fed announcement, Mike Fratantoni, chief economist for the Mortgage Bankers Association, said:

Ads by Ad Practitioners
What are current mortgage rates?
Find your actual rate at Quicken Loans - click your state to get started and see your rate today.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
View Rates
ADVERTISEMENT

Mortgage Tip of the Week

Buying a home can be daunting. Follow these expert tips to make the process easier.

Ralph DiBugnara, president of Home Qualified, on locking in your mortgage rate:

For more on rate locks: Why a Rate Lock Makes Sense Right Now, Even with Mortgage Rates Falling

Ads by Ad Practitioners
ADVERTISEMENT

Bottom line:

Congratulations, Home Seller: A Bidding War Just Broke out for Your House. Here’s How to Pick the Best Offer

The Overlooked Reason It’s So Hard to Buy a Home in 2020

Millions of Homeowners Are Falling Behind on Their Mortgage Payments. Here Are Your Options if You’re One of Them

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

EDIT POST