Historically low mortgage rates
Mortgage rates have taken a stunning plunge, to an average 2.72% for a 30-year fixed-rate loan. That's down from last week’s 2.84%, mortgage giant Freddie Mac said on Thursday, and rates are the lowest since the company began record-keeping in 1971.
Rates rose last week as financial markets celebrated promising test results for the coronavirus vaccine from drugmaker Pfizer. But this week, cold realities set in.
“Investors had to weigh the promising news of another vaccine contender against this week’s disappointing retail report and still-rising COVID cases,” says George Ratiu, senior economist at Realtor.com.
The Commerce Department reported earlier this week that U.S. retail sales rose by a weaker-than-expected 0.3% in October. Meanwhile, coronavirus infections have exploded nationwide.
Rates on 30-year mortgages are now nearly one full percentage point below where they were a year ago, when the average was 3.66%
Low rates fuel a refi rush
Rates on other popular mortgages also have fallen this week, the Freddie Mac survey shows.
For 5/1 adjustable-rate mortgages, or ARMs, the current average is 2.85%, way down from last week’s 3.11% and last year’s 3.39%.
The average for a 15-year fixed-rate mortgage has decreased to an all-time-low 2.28%, from 2.34% last week. These mortgages, often used for refinance loans, remain deeply below last year at this time, when the average was 3.15%.
Refi requests have been coming in at double the rate of a year ago, according to the Mortgage Bankers Association.
But many homeowners are still sitting on their hands. Some 18.5 million mortgage holders are in a good position to refinance and save around $300 monthly, the mortgage data firm Black Knight said earlier this month. The researchers say 2.5 million could even save $500 or more every month by refinancing.
Good refi candidates — those with a solid credit score and at least 20% home equity — may need to hurry to lock in one of the best rates while they last.
Buyers love cheap mortgage rates, too
Low mortgage rates have made for a very competitive housing market this year. With a low supply of homes to fight over, buyers have seen prices steadily rise.
“Despite persistent economic uncertainty and the worsening spread of COVID-19, it’s abundantly clear that home shoppers are eager to reassess their living situations,” says Matthew Speakman, an economist with Zillow.
And here's good news: There are signs that improving seller confidence is leading to an “encouraging rebound” in housing supply, says a new report from Realtor.com.
Experts say homebuyers should gather and compare at least five mortgage offers to find the best deal — because rates can vary sharply from one lender to the next.
Be sure to put those same comparison shopping skills to work when you buy or renew your homeowners insurance. Get quotes from several insurers and review them side by side, to find the lowest price for your coverage.