Here Are Today's Best Mortgage & Refinance Rates for September 17, 2020
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 |
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).
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:
The Federal Reserve recommitted today to keep short-term rates low, and re-upped their plans to buy MBS and longer-term Treasuries at the same pace as in recent months. The Fed’s new framework to keep rates low until inflation visibly rises beyond their 2 percent target will mean that liftoff from zero will occur later than in the last cycle – allowing the unemployment rate to fall even further than the 50-year low we saw in February.
Recent key economic data – specifically retail sales and industrial production – indicate that the pace of the economic recovery slowed in August, likely due to the end of some of the fiscal supports to households and businesses. However, the housing market continues to be quite strong, with home sales and home prices growing, and the pace of construction quickening. Lower rates are definitely helping to support the current stretch of strong home purchase demand, while also continuing to generate robust refinance volume.”
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:
The most important factors when locking in interest rates are what time frame it will need to be locked for and not taking on too much risk for a little reward. When a lender locks an interest rate they have to choose a time frame which is usually between 15 days and 120 days. The shorter the lock time frame the lower the rate you can expect. But if you or the lender misjudge that time frame it can become a very expensive mistake. If a rate expires or needs to be extended traditionally it will cost you a fee."
For more on rate locks: Why a Rate Lock Makes Sense Right Now, Even with Mortgage Rates Falling
Bottom line:
The Overlooked Reason It's So Hard to Buy a Home in 2020