An Update On Interest Rates

As we wrote about in January and in June, this year has given us some of the lowest interest rates on record. This reflects the Fed’s desire to encourage borrowing and spending during a tumultuous economic period.
But now that we have reached fall 2020, do interest rate conditions still favor borrowers?
The short answer is yes, but with a few caveats…

Mortgage Interest Rates

While many believed mortgage rates had bottomed out during the summer, that has not been the case. According to data from Freddie Mac, average nationwide mortgage interest rates have dropped each month this year:

Image Source: Wells Fargo

However, dramatically decreased costs of borrowing does not always mean increased access. MarketWatch reported last week that because of uncertainty around the job market, mortgage credit availability has dropped to its lowest levels since March 2014. In other words, despite falling rates, it’s actually harder to get a mortgage than at any point in the last six and a half years!
In spite of this, we are ready to advise our clients on navigating this uncertain lending landscape.

Refinance Interest Rates

Refinance rate data is not as commonly aggregated as for mortgage rates. But fluctuations in refi rates are closely tied to mortgage rates, so the data above is a good indicator.
We have indeed seen refi rates drop consistently throughout 2020, so this is also a great time to consider refinancing your existing mortgage.
In fact, last month an “Adverse Market Fee” was announced by the Federal Housing Finance Agency. This means that, effective December 1st, lenders will be charged an additional 0.5% on most mortgage refinances, and many expect some of these costs to be passed on to borrowers.
And because processing a refi can take up to several months, we encourage anyone interested to begin the process now! That way, they can avoid any unnecessary fees.