Today’s Best Mortgage & Refinance Rates for November 5, 2020

Finding the right mortgage rate is one of the most important financial decisions homebuyers and refinancing homeowners can make. The mortgage market continues to present compelling opportunities for borrowers seeking to purchase a new home or refinance an existing mortgage. On November 5, 2020, the housing market remained particularly attractive, with historically low interest rates available to qualified borrowers across the nation.

Money’s daily mortgage rate survey aggregates data from more than 8,000 lenders throughout the United States, providing comprehensive insights into current lending conditions. These rates are updated continuously and reflect what borrowers with a 20% down payment and approximately 700 credit scores—around the national average FICO score—would typically be quoted by lenders. Understanding current rates is essential for making informed decisions about home purchases and refinancing opportunities.

30-Year Fixed-Rate Purchase Mortgage Rates

The average rate for a 30-year fixed-rate purchase mortgage was 3.411% on Wednesday, November 4, 2020. This rate represents a historic opportunity for first-time homebuyers and repeat purchasers alike. The 30-year fixed-rate mortgage remains the most popular loan product among American homebuyers due to its predictability and stable monthly payments over three decades.

Rates at this level provide significant savings compared to historical averages. For a typical home purchase of $300,000 with 20% down ($60,000), borrowers would finance $240,000. At 3.411%, the monthly principal and interest payment would be approximately $1,074, compared to substantially higher payments just a few years earlier when rates were above 4%.

How Mortgage Rates Vary by State

Mortgage rates do not remain uniform across the United States. Geographic location plays a significant role in determining the specific rate a borrower receives. On Wednesday, state-by-state analysis revealed considerable variation in average mortgage rates offered to borrowers.

Lowest State Rates: Borrowers in Kentucky were quoted the lowest average mortgage rates at 3.237%. This represents a 0.174 percentage point advantage compared to the national average, which could translate to meaningful savings over the life of a 30-year loan.

Highest State Rates: Meanwhile, borrowers seeking mortgages in Nevada encountered the highest average rates at 3.718%. This 0.307 percentage point spread between the lowest and highest state averages demonstrates the importance of shopping around and potentially considering relocating mortgage applications to capture better rates where possible.

These state-level variations reflect differences in local lending markets, competition among lenders, and regional economic conditions. Borrowers should not accept the first rate quoted by a single lender but should actively shop among multiple lenders in their state to ensure they receive competitive pricing.

Credit Score Impact on Mortgage Rates

Your credit score significantly influences the mortgage rate you will receive. Lenders use credit scores to assess risk, and borrowers with higher scores qualify for lower rates, while those with lower scores face higher rates.

Excellent Credit Rates: Nationwide, borrowers with credit scores of 740 and above were quoted rates averaging 2.947%. This rate is considerably lower than the national average of 3.411%, representing a 0.464 percentage point advantage. A borrower with excellent credit financing $240,000 at 2.947% would pay approximately $1,008 monthly, saving about $66 per month compared to the average rate.

Lower Credit Score Rates: Conversely, borrowers with credit scores of 640 or below faced rates averaging 4.734%. This represents a significant premium—a 1.787 percentage point spread compared to borrowers with excellent credit. For the same $240,000 loan, a monthly payment at 4.734% would exceed $1,253, creating a $245 monthly difference compared to excellent credit borrowers.

Over a 30-year mortgage, this credit score-related rate differential can mean more than $88,000 in additional interest payments. Improving your credit score before applying for a mortgage can yield substantial financial benefits.

Strategies for Negotiating Better Mortgage Rates

While advertised rates provide a baseline for comparison, borrowers have several opportunities to negotiate more favorable terms:

– Shop Multiple Lenders: Different lenders compete aggressively for mortgage business. Obtaining quotes from at least three to five different lenders can reveal significant rate variations, sometimes spanning 0.25% to 0.5%.- Existing Relationships: Borrowers who maintain other accounts with a financial institution may be able to negotiate lower rates. Banks often offer preferential pricing to customers with deposits, credit cards, or investment accounts.- Demand Management: Currently, some banks are strategically raising advertised rates to manage high demand for mortgages. Direct communication with lenders about your specific situation may result in lower actual offers than publicly advertised rates.- Mortgage Broker Assistance: Working with mortgage brokers who have relationships with multiple lenders can sometimes reveal better rates than going directly to banks.

Freddie Mac’s Primary Mortgage Market Survey

Freddie Mac, one of the nation’s largest mortgage purchasers, conducts the widely cited Primary Mortgage Market Survey. This survey reflects mortgage rates available to borrowers making 20% down payments on conforming loans with excellent credit. For the week ending November 5, 2020, Freddie Mac reported rates of 2.78% with 0.6 points paid. This represented a new record low and marked the twelfth time this year that interest rates had set a historic low.

The Freddie Mac survey differs from Money’s survey in that it specifically tracks loans to the most creditworthy borrowers and conforming loans (those within standard lending limits). This explains why Freddie Mac’s 2.78% rate appears lower than Money’s 3.411% national average, which includes borrowers with average credit scores and various loan programs.

30-Year Fixed-Rate Mortgage Refinance Rates

For existing homeowners considering refinancing their mortgages, refinance rates present a compelling opportunity. Money’s survey shows that the offered rate for a 30-year refinance for someone with a 740 credit score was 3.655% on Wednesday. This compares favorably to rates from the previous year.

Refinancing Savings Example

To illustrate the potential savings from refinancing at current rates, consider a homeowner with a $200,000 mortgage balance currently paying 3.874% on a 30-year loan. Their existing monthly payment (principal and interest) is $940.

By refinancing at the current rate of 3.655%, the monthly payment would decrease to approximately $915. This represents a monthly savings of $25, or $300 annually. Over the remaining term of the loan, depending on how many years remain, this could translate to substantial cumulative savings.

However, refinancing involves closing costs, typically ranging from 2% to 5% of the loan amount. For a $200,000 loan, closing costs might range from $4,000 to $10,000. Borrowers should calculate the break-even point—how long it takes for monthly savings to offset closing costs—before deciding to refinance. If you plan to remain in the home long enough to recoup these costs, refinancing makes financial sense.

Factors to Consider Before Refinancing

Beyond monthly payment savings, several factors should influence your refinancing decision:

– Closing Costs: Understand exactly what your new lender is charging and compare total costs across lenders.- Loan Term Remaining: If you have fewer than five years remaining on your current loan, refinancing may not make financial sense due to closing costs.- Interest Rate Differential: Generally, refinancing becomes worthwhile when you can reduce your rate by at least 0.5% to 1.0%.- Credit Score Impact: Refinancing triggers a hard inquiry that slightly lowers your credit score, though this impact is typically temporary.- Cash-Out Options: Some refinances allow borrowers to extract equity as cash, which should be carefully evaluated.

Housing Market Conditions in November 2020

The mortgage rate environment exists within a broader housing market context. In November 2020, the housing market remained robust despite economic uncertainty from the pandemic. Median listing prices remained at their summertime high of $350,000, defying normal seasonal patterns. Typically, median list prices would have decreased between 1% and 4% from their summer peak by October. Instead, prices were up 12.2% year-over-year, reflecting strong demand and limited inventory.

Regional Price Variations: The Northeast experienced the largest price gains, increasing by 11.4%, followed by the West with approximately 10% gains, the Midwest up 9%, and the South up 7.3%.

New Listing Activity: The West and Northeast regions saw the largest year-over-year improvement in new listings, up 7.2% and 4.1% respectively. However, the South and Midwest regions lagged, with new listings down 13.8% and 9.5% respectively. This inventory imbalance contributed to the sustained price appreciation in many markets.

Frequently Asked Questions About Mortgage Rates

Q: What credit score do I need to qualify for a mortgage?

A: While lenders may work with borrowers having credit scores as low as 580, rates improve significantly with higher scores. Scores of 700 or higher typically qualify for much better rates, while scores of 740+ receive the best available pricing.

Q: How often do mortgage rates change?

A: Mortgage rates change daily and sometimes multiple times within a single day, responding to bond market movements, economic data, and Federal Reserve actions. Money updates rates daily from thousands of lenders.

Q: Can I lock in a mortgage rate?

A: Yes, lenders offer rate locks, typically ranging from 15 to 60 days. This protects your rate from increasing during the loan application and underwriting process, though you generally cannot benefit if rates drop.

Q: What is the difference between APR and interest rate?

A: The interest rate is the annual cost of borrowing. The APR includes the interest rate plus other costs and fees associated with the loan, providing a more comprehensive picture of the actual cost.

Q: Should I choose a 15-year or 30-year mortgage?

A: A 30-year mortgage offers lower monthly payments and greater flexibility, while a 15-year mortgage builds equity faster and involves less total interest paid. Choose based on your financial situation and long-term goals.

Q: How do discount points work?

A: Discount points are prepaid interest, with each point costing 1% of the loan amount and typically reducing the rate by 0.25%. Paying points makes sense if you plan to keep the mortgage long enough to recoup the upfront cost.

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Author

medha deb

 

Medha Deb is an editor with a master's degree in Applied Linguistics from the University of Hyderabad. She believes that her qualification has helped her develop a deep understanding of language and its application in various contexts.

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