Current Mortgage Rate Trends

The current mortgage rates are at record lows and have been for most of 2020. COVID-19 has a lot to do with the current trends in the market. The uncertainty in the U.S. economy as well as the unpredictable stock market has fueled the low rates.

COVID-19 added some additional cost therefore the Federal Housing Finance Agency added a 0.5% refinance fee in December 2019 on Fannie Mae and Freddie Mac. Turn times were also affected by the pandemic. Fortunately, the current average is 42 days to close on a home loan.

September the average rate on a 30-year fixed mortgage with 0.8 points paid in fees was 2.87%. The 15-year fixed mortgage with 0.8 points paid was 2.35% which was a huge drop from September 2019.

Many investors have turned from stocks and put money back into bonds. This has kept the mortgage rates low and also anchored the market for new and existing home sales.

Another positive for the mortgage market is the promise for the Federal Reserve’s Open Market Committee to keep purchasing mortgage-backed securities. The more buyers there are in that market, the lower mortgage rates can be because the bonds underlying the loans don’t need to offer as high of a return to attract a buyer.

According to the Federal Reserve terms, they have committed to keeping short-term rates low until 2024. These rates go hand-in-hand with longer-term rates for mortgages. More than likely we will keep seeing low rates for the next couple of years.

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