How far have mortgage rates fallen?

The average for a 30-year fixed-rate mortgage dropped on Tuesday to a stunning 2.81%, according to Mortgage News Daily. That's a new low for the publication's daily survey of lenders.

"Mortgage rates have fallen more aggressively than ever and they've been remarkably willing to set record after record," says Matthew Graham, chief operating officer of Mortgage News Daily.

One year ago, MND had rates nearly 1 full percentage point higher, at an average 3.70%.

Mortgage rates have spiraled downward as the numbers of coronavirus cases and deaths in the U.S. have shot higher, and as economic news has gone from depressing to disastrous. A report last week showed the economy took a record plunge during the spring months.

Amid the economic uncertainty, skittish investors have been plowing their money into Treasury bonds, for safety. The demand for bonds has sent their interest rates (or "yields") into a steep slide, and mortgage rates have tagged along.

Low mortgage rates are a boon to borrowers

Golden gift box with red ribbon
WooHoo Production / Shutterstock

The cratering mortgage rates have been a huge gift to homebuyers and homeowners. For buyers, the low rates have taken some of the sting out of rising home prices, especially in markets with shortages of houses for sale.

Homeowners can refinance their mortgages and pocket huge savings. Refinancing at deeply reduced rates would allow nearly 18 million mortgage holders to cut their mortgage payments by an average $287 a month, mortgage data firm Black Knight said this week.

But there can be vast differences between the rates offered by different lenders. So if you're looking to buy or refi, you will need to shop around to find the lowest rate available to a borrower with your profile, including your credit score.

What you'll want to do is go online, get at least three to five mortgage offers and review them side by side — to find your best deal.

Use the same smart strategy when you buy or renew your homeowners insurance. Look up a handful of rate quotes and sort through them carefully, so you'll be certain of getting the right coverage at the right price.

How much lower can mortgage rates go?

Now that average 30-year mortgage rates have plummeted to 2.81%, what's next? 2.75%? 2.5%?

"In an environment like this, it makes sense that rates could go even lower, but only for so long," writes Graham. "Naturally, rates will have to stop setting new record lows at some point. Unfortunately, it's impossible to know exactly when that will be."

How mortgage rates move will continue to depend on what happens with COVID-19 and the economy, says Matthew Speakman, an economist with Zillow.

"Bad news on either topic will continue to place downward pressure on rates, but it’s likely that this pressure won’t drop rates much lower than they are today," Speakman says.

So, there's a chance mortgage rates could go at least a smidge lower. But experts say if you're in the market for a loan, it's never a good idea to wait for what may happen when today's rates are already low enough to save you a bundle.

About the Author

Doug Whiteman

Doug Whiteman


Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

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