30-year mortgage rate breaks through to another record low

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Mortgage rates fell to new a record low this week. The benchmark 30-year fixed-rate mortgage dropped 2 basis points to 3.09 percent from a week earlier, according to Bankrate’s weekly survey of large lenders.

A year ago, it was 3.97 percent. Four weeks ago, the rate was 3.14 percent. The 30-year fixed-rate average for this week is 0.87 percentage points below the 52-week high of 3.96 percent.

The 30-year fixed mortgages in this week’s survey had an average total of 0.31 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 3.62 percent. This week’s rate is 0.53 percentage points lower than the 52-week average.

  • The 15-year fixed-rate mortgage fell to 2.53 percent from 2.55 percent.
  • The 5/1 adjustable-rate mortgage fell to 3.21 percent from 3.25 percent.
  • The 30-year fixed-rate jumbo mortgage fell to 3.55 percent from 3.57 percent.

At the current 30-year fixed rate, you’ll pay $426.47 each month for every $100,000 you borrow, down from $427.56 last week.

At the current 15-year fixed rate, you’ll pay $668.20 each month for every $100,000 you borrow, down from $669.15 last week.

At the current 5/1 ARM rate, you’ll pay $433.01 each month for every $100,000 you borrow, down from $435.21 last week.

Results of Bankrate.com’s weekly national survey of large lenders conducted September 16, 2020 and the effect on monthly payments for a $165,000 loan:

Weekly national mortgage survey
Breakdown 30-year fixed 15-year fixed 5-year ARM
This week’s rate: 3.09% 2.53% 3.21%
Change from last week: -0.02 -0.02 -0.04
Monthly payment: $703.68 $1,102.53 $714.47
Change from last week: -$1.79 -$1.56 -$3.62

Where mortgage rates are headed

In the week ahead (Sept. 17-23), 14 percent of the experts on Bankrate’s panel predict rates will rise, while 71 percent expect rates to hold steady and 14 percent think rates will fall.

“Status quo on the interest rate front and no groundbreaking economic releases on the calendar in coming days,” said Greg McBride, chief financial analyst, Bankrate.com.

“There is definitely some uncertainty in the air in preparation for the Fed’s meeting. With this you can already see some negative movement in the rates as a counter tactic, as well as some early reaction ahead of the loan-level pricing adjustment coming in December. As predicted with extended turn times and preparing loans sales for delivery to the GSEs by the December deadline, we are already seeing some change in the market impacting rates. I think it’s important to note that although we are seeing some movement in rates, they are not extreme moves and likely will still be lower than pre-COVID levels,” said Jennifer Kouchis, senior vice president, real estate lending, VyStar Credit Union in Jacksonville, Florida.

Homebuyers and refinancers can expect low mortgage rates indefinitely

Rates are at a record low and are expected to stay this way for many months to come. You can see the forecast from various experts for the year ahead here.

That means more and more homeowners can refinance to cut their monthly mortgage payments. However, refinancing comes with costs that you must make up if you are to profit from a refi. Bankrate has a calculator to help you decide whether refinancing is a good idea.

Related story: As mortgage rates fall to record lows, beware high closing costs.

Jumbo borrowers, meanwhile, will find they must cast a wide net to find a mortgage, and they will pay a higher interest rate. Some lenders, fearful of risk during the coronavirus recession, have left this market. Refinancing with cash out is shrinking too as lenders are worried people will lose their jobs and be unable to pay, while home values could possibly fall if the recession is prolonged.

Market watchers are waiting for the spread between Treasury yields and mortgage rates to narrow, a development that would create additional downward pressure on rates. But with the Federal Reserve’s commitment to nearly unlimited buying in the mortgage-backed securities market, anyone with good to excellent credit who wants a mortgage this spring should be able to snag a historically low rate, and even borrowers with poor to bad credit will benefit as well with a lower rate than before the Fed intervention.

The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates may differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types – thrifts, credit unions, commercial banks and mortgage lending companies – is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.