Mortgage Interest Rates Forecast

Holden LewisDecember 1, 2020
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Mortgage rates today: Tuesday, Dec. 1, 2020

On Tuesday, Dec. 1, 2020, the average rate on a 30-year fixed-rate mortgage fell four basis points to 2.834%, the average rate on a 15-year fixed-rate mortgage fell two basis points to 2.424% and the average rate on a 5/1 ARM rose two basis points to 2.946%, according to a NerdWallet survey of mortgage rates published daily by national lenders. A basis point is one one-hundredth of one percent. Rates are expressed as annual percentage rate, or APR. The 30-year fixed-rate mortgage is six basis points lower than one week ago and 116 basis points lower than one year ago.

NerdWallet's coronavirus resources page tracks the latest developments, including information on loan and payment relief, ways to cope and how to best manage your personal finances.

If you can't make your full mortgage payment, or you're worried that you won't be able to make the payments soon, contact your mortgage servicer immediately. Under provisions of the CARES Act, you may be eligible for mortgage forbearance, temporary relief in which the lender allows you to make lower monthly payments, or no payments at all, for a specified time. NerdWallet's article about mortgage forbearance explains the basics.

A forbearance may prevent you from getting another mortgage for at least three months. Lenders are unlikely to approve you for a mortgage until you have made three on-time payments following the forbearance. During that period, you probably won't be able to get a mortgage to buy a home or to refinance.

See what types of mortgage relief programs are available to homeowners who are worried about making their house payments due to the coronavirus outbreak.

To get help, you will need to contact the mortgage servicer that collects payments. See an alphabetical list of mortgage servicers with contact information.

Here are general guidelines for what to do if you can't pay your mortgage.

Mortgage rates this week

Mortgage rates dropped during the short Thanksgiving week.

  • The 30-year fixed-rate mortgage averaged 2.86% APR, down four basis points from the previous week's average.

  • The 15-year fixed-rate mortgage averaged 2.46% APR, down two basis points from the previous week's average.

  • The 5/1 adjustable-rate mortgage averaged 2.95% APR, down six basis points from the previous week's average.

The reasons for the decline are obscure. Bond trading can be light during the short weeks toward the end of the year, making bond yields move up and down inscrutably and causing mortgage rates to do the same.

With mortgage rates below 3%, qualified borrowers have been on an enthusiastic homebuying spree. In October, people bought brand-new homes at an annual pace of 999,000 dwellings, according to the U.S. Census Bureau and the Department of Housing and Urban Development. That was a 41.5% increase over the 706,000 sales pace a year earlier, in October 2019. At the same time, the median new home price increased just 2.5%, to $330,600.

It would take just 3.3 months to sell out the inventory of new homes that were for sale at the end of October if people continued to buy them at the same rate. September had a 3.3-month supply, too. It's the lowest supply of new homes in the 57-year history of the Census's monthly new home sales survey.

December mortgage rates forecast

The good news is that mortgage rates are unlikely to rise in December. The bad news is why: The United States faces much economic uncertainty.

At least three expiration dates are coming up in December, with no guarantee that they will be addressed or extended:

Dec. 11: If the White House and Congress can't agree on a spending plan by this date, a government shutdown could follow.

Dec. 26: Extensions of two federal unemployment benefits — Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation — are set to expire this day or the next, depending on state of residence. If unemployed people lose their benefits, they will have less money to spend, further contracting an economy that's already in recession.

Dec. 31: An eviction moratorium for nonpayment of rent expires. This moratorium was issued by the Centers for Disease Control and Prevention because, in the CDC's words, "evictions threaten to increase the spread of COVID-19." A wave of evictions could cost social safety net programs more than $60 billion, according to a joint study from the National Low Income Housing Coalition and the Innovation for Justice Program at the University of Arizona's law school.

The most recent government shutdown lasted from Dec. 22, 2018, to Jan. 25, 2019. The average rate on the 30-year fixed-rate mortgage didn't vary much during that 35-day period, staying in a range of 4.53% to 4.7%.

But the rate fell before the shutdown and again after the shutdown ended. A month before the shutdown began, the 30-year fixed-rate mortgage averaged 4.95%; one month after it ended, the 30-year averaged 4.48%, having fallen almost half a percentage point.

If history is a reliable guide, mortgage rates could fall before Dec. 11 if a shutdown seems imminent. But history isn't always a reliable forecaster. The 30-year mortgage has averaged below 3% APR since early September in NerdWallet's daily survey. There's not much room for mortgage rates to fall further.

Mortgage rates do have plenty of room to rise. But they're unlikely to go up substantially until the economy emerges from recession. A government shutdown, an expiration of unemployment benefits and a wave of evictions would be more likely to intensify the economic downturn rather than relieve it.

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