Mortgage rates make history again

Model of house shot on graph depicting mortgage rates
Jim Barber / Shutterstock

Mortgage rates have hit an all-time low yet again, averaging just 2.81% for a 30-year fixed-rate loan, down from last week’s 2.87%, mortgage company Freddie Mac said on Thursday.

Last year at this time, rates were averaging 3.69%. At the start of 2020, they were even higher — at an average 3.72%.

"Low mortgage rates have become a regular occurrence in the current environment," says Sam Khater, Freddie Mac’s chief economist. “As we hit yet another record low, the 10th record this year, many people are benefiting as refinance activity remains strong."

Refinancing has stalled in recent weeks, according to the Mortgage Bankers Association, or MBA, though applications for refinance loans are up by double-digit percentages compared to a year ago.

Joel Kan, the chief forecaster for the MBA, said recently that it was possible many homeowners were holding back on refinancing because they were "waiting for rates to go even lower."

All-time-low mortgage rates could set off a new refinance wave, and so could the threat of rising rates. A new Freddie Mac forecast predicts 30-year fixed mortgage rates will average 3.0% throughout 2021 — up from the current rock bottom.

Refinancers should stop procrastinating

Friendly subdivision neighborhood Aerial
TDKvisuals / Shutterstock

Homeowners also have to hurry to beat a new 0.5% fee on refinance loans that could lead to higher refi mortgage rates.

Freddie Mac and Fannie Mae — government-sponsored mortgage giants that buy most U.S. home loans from lenders — say COVID-19 has made the fee necessary, as the companies look to offset losses related to the pandemic.

An estimated 19.3 million mortgage holders could refinance and lower their interest rates enough to reduce their monthly payments by an average $299, according to research from the mortgage data firm Black Knight.

That means good refi candidates — those with a solid credit score and at least 20% home equity — need to hurry to lock in the best rates while they can, before the refi fee goes into effect on Dec. 1. Some lenders already have started to pass it along to borrowers in the form of higher mortgage rates.

Because rates can vary wildly from one lender to the next, homeowners should shop around to get the best deal. Compare a minimum of five rate quotes from different lenders. According to a Freddie Mac study, borrowers who shop around to five lenders can save about $3,000 over time compared to someone with only one offer.

If rates rise quickly, you’ll need to look for savings elsewhere. You can use your expert comparison shopping skills when you buy or renew your homeowners insurance, so you’ll get the right coverage at the lowest possible price.

Relief on the horizon for homebuyers

Young Couple Looking At House On Laptop's Screen
Andrey_Popov / Shutterstock

Homebuyers looking to take advantage of alluring mortgage rates are finding that high competition and low supplies of houses for sale are pricing them out of the market.

The average listing price is more than 12% higher compared to last year, according to a report from Listings are low and the homes that do reach the market are selling a full two weeks faster than a year ago.

But it’s not all bad news for prospective buyers. Over the last month, the decline in inventory has slowed, or even improved, the report shows, and seller confidence is growing.

“While many buyers will still struggle to find the right home for their budget this fall, this week’s data shows more sellers are finding the motivation to list, providing more options for buyers than is typical for October,” says Javier Vivas, director of economic research at

The Freddie Mac survey shows rates on other popular mortgages are steady this week. The average for a 15-year fixed-rate mortgage has decreased to 2.35%, from 2.37% last week. These mortgages, often used for refinance loans, remain miles below last year, when the average was 3.15%.

Rates on 5/1 adjustable-rate mortgages, or ARMS, are averaging 2.90%, a tick up from last week’s 2.89%, but still way down from last year’s 3.35%.

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About the Author

Ethan Rotberg

Ethan Rotberg


Ethan Rotberg is a staff reporter at MoneyWise. His background includes nearly 15 years as a writer, editor, designer and communications professional. He loves storytelling, from feature writing to narrative podcasts. His work has appeared in the Toronto Star, CPA Canada and Metro, among others.

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