by Matt Frankel, CFP | Updated July 19, 2021 - First published on Nov. 6, 2020
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Mortgage rates are holding steady near all-time lows, but demand is getting stronger.
Mortgage rates have barely changed over the past week, but we're seeing an uptick in mortgage applications as we head into the final months of 2020.
According to The Ascent's mortgage tracking methodology, the current average interest rate on a 30-year fixed-rate mortgage is 2.879%. This is a 0.006% decrease over the same time last week. So mortgage rates appear to be holding steady.
Other mortgage tracking surveys found similar results. The two most widely cited mortgage rate surveys are done by the Mortgage Bankers Association and Freddie Mac. These track other trends such as mortgage application volume, so here's a quick look at each one and what they tell us.
According to the Mortgage Bankers Association, the average rate on a 30-year fixed-rate mortgage for the week ending Oct. 30 was 3.01%, which is a slight increase from the prior week's 3% average. The MBA's survey also shows the average new applicant pays 0.38 points when obtaining a new 30-year loan. This is also slightly up from 0.35 points on average a week ago. (If you aren't familiar, a mortgage point is equal to one percent of a mortgage loan amount.)
The Mortgage Bankers Association survey also takes a look at mortgage demand. We've seen a bit of an uptick recently, but most of the surge comes from refinancing. Overall application volume increased by 3.8% from the previous week, but this was entirely fueled by a 6% increase in refinancing applications. In fact, purchase mortgage activity declined by 1% from the week prior but is still 25% higher than a year ago.
Freddie Mac's latest survey shows the national averages as of Nov. 5. The average rate on a 30-year fixed-rate mortgage declined slightly to 2.78% from 2.81% a week ago, and the average borrower paid 0.7 points. For a 15-year loan, the average applicant received a 2.32% interest rate and paid 0.6 points, which was unchanged from last week. Generally, 15-year loans come with a lower overall borrowing cost than 30-year mortgages.
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The general theme is that mortgage rates have stayed steady near all-time lows. None of the three mortgage tracking surveys mentioned in the previous section found a significant change in rates over the past week.
Check out The Ascent's mortgage calculator to estimate what your monthly payment might be including principal, interest, insurance, taxes, and PMI.
Nobody has a crystal ball that can predict where mortgage rates are going, and I'm certainly no exception. But recent trends and overall economic conditions don't give much of a reason to believe that rates will head higher anytime soon. The Federal Reserve continues to hold benchmark interest rates at near-zero levels and has indicated its intention to continue to do so for the foreseeable future.
Unemployment in the United States remains elevated and inflation remains low. That combination should keep the cost of borrowing low for at least the rest of 2020. But one thing is for certain -- now is a historically cheap time to borrow money to buy a home or refinance an existing mortgage.
With that in mind, if you're looking to buy a home or refinance, or are just curious about how low of a mortgage rate you might be able to get, check out our updated list of the best mortgage lenders.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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