Mortgage Interest Rates Forecast

Holden LewisNovember 23, 2020
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Mortgage Outlook: For November Rates, the Picture Is Hazy

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Mortgage rates today: Monday, Nov. 23, 2020

On Monday, Nov. 23, 2020, the average rate on a 30-year fixed-rate mortgage dropped five basis points to 2.817%, the average rate on a 15-year fixed-rate mortgage fell two basis points to 2.451% and the average rate on a 5/1 ARM went down three basis points to 2.972%, 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 eight basis points lower than one week ago and 115 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

Fixed mortgage rates slipped the week ending Nov. 20, as the pandemic took a turn for the worse.

  • The 30-year fixed-rate mortgage averaged 2.9% APR, down four basis points from the previous week's average.

  • The 15-year fixed-rate mortgage averaged 2.48% APR, down five basis points from the previous week's average.

  • The 5/1 adjustable-rate mortgage averaged 3.01% APR, up one basis point from the previous week's average.

The small drop in fixed mortgage rates happened as COVID-19 cases continued to surge, resulting in restrictions on indoor dining and gatherings in some states. The  current wave of coronavirus is reminiscent of outbreaks in the spring, and the recession that followed the resulting shutdowns.

The economic downturn hasn't affected all homeowners equally.

  • On one side, 2.7 million homeowners are in mortgage forbearance plans, which allow them to make partial house payments, or skip payments altogether, if they have suffered COVID-related interruptions in income.

  • On the other side, people are buying homes as if the economy were booming instead of busting.

Existing home sales rose to an annual pace of 6.85 million units in October, the National Association of Realtors reported. It was the strongest sales rate since November 2005, according to the National Association of Home Builders. The median home price was $313,000, for a 15.5% increase over 12 months.

At October's rate of sales, all 1.42 million homes on the market would be sold in 2.5 months, a record low housing supply; 72% of homes sold in October had been on the market for less than a month.

Intense demand led to the rapid rise in prices. In normal times, you might expect higher prices to entice owners to list their homes for sale. But the holiday season is approaching and coronavirus cases are skyrocketing, so it's doubtful that the shortage of homes for sale will end this year.

November mortgage rates forecast

Mortgage rates move unpredictably in the weeks after presidential elections — not always, but often enough to humble any forecaster who is asked to predict mortgage rates in November of an election year.

In contrast, mortgage rates are predictable during the month before a presidential election. I said rates wouldn't move much in October, and sure enough, they drifted just a little: The 30-year fixed-rate mortgage averaged 2.95%, down a smidge from September's average of 2.98%.

To see how difficult it is to predict the future, answer this one-question quiz about the past: What happened to mortgage rates in the 2000 disputed election — did they go up, down or stay about the same?

The answer is that the 30-year fixed-rate mortgage was steady in November, remaining in a range of 7.73% to 7.79%, according to Freddie Mac records. But the rate tumbled more than half a percentage point that December, which is an unusually fast descent. It fell both before and after the Supreme Court's Bush v. Gore decision on Dec. 12, and averaged 7.13% in the last week of the year.

Since 2000, election-year Novembers have sent rates up, down, about the same, and up again.

  • When George W. Bush was reelected in 2004, mortgage rates climbed. The 30-year fixed averaged 5.64% the week before the election, and averaged 5.81% the week ending Dec. 2.

  • The 2008 election occurred during a financial crisis, and mortgage rates plummeted almost one percentage point in five weeks. The 30-year fixed averaged 6.46% the week before the election, and 5.53% the week ending Dec. 4.

  • When Barack Obama was reelected in 2012, mortgage rates dropped, but not as dramatically as four years before. The 30-year fixed fell from 3.39% the week before the election to 3.32% the week ending Nov. 29.

  • In 2016, mortgage rates zoomed upward when Donald Trump was elected. The 30-year fixed averaged 3.47% the week before the election, and climbed to 4.08% the week ending Dec. 1. It was the opposite of what had happened in December 2000.

What history can't tell us about future rates

This history lesson teaches us a couple of things:

First, mortgage rates moved more than half a percentage point soon after three of the last five presidential elections (up once, down twice, if you're keeping score).

Second, those big movements in rates hadn't been widely predicted. Each time, observers gave after-the-fact explanations for the movement of mortgage rates, but the experts could have summoned equally plausible explanations if rates had moved the opposite way.

If there's any advice to give, it's this: Don't try to time the mortgage market based on the expected election results. You might be surprised not only by the winner, but by the market's reaction as well.

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