Mortgage Interest Rates Forecast

Holden LewisAugust 5, 2020
Mortgage Interest Rates Forecast fork

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

Mortgage rates today: Wednesday, Aug. 5, 2020

On Wednesday, Aug. 5, 2020, the average rate on a 30-year fixed-rate mortgage fell three basis points to 3.008%, the average rate on a 15-year fixed-rate mortgage dropped three basis points to 2.611% and the average rate on a 5/1 ARM fell one basis point to 2.869%, 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 11 basis points lower than one week ago and 94 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 a week of unwelcome economic news.

  • The 30-year fixed-rate mortgage averaged 3.14% APR, a record low for the weekly average. It was four basis points lower than the previous week's average.

  • The 15-year fixed-rate mortgage averaged 2.71% APR, two basis points lower than the previous week's average.

  • The 5/1 adjustable-rate mortgage averaged 2.9% APR, one basis point lower than the previous week's average.

Two economic events dominated the week: the Federal Reserve's monetary policy meeting and the release of data about the economy's performance in the second quarter.

The Federal Reserve pledged to keep using its tools to "act as appropriate to support the economy." In the dry language of the Fed, this is like swearing an oath to do whatever it takes to keep the economy running in what Chair Jerome Powell called "the biggest shock to the U.S. economy in living memory."

Later, the Commerce Department announced that economic activity plunged at a 32.9% annual rate in the second quarter of the year. The department said the full economic effects of COVID-19 are unquantifiable.

August mortgage rates forecast

Mortgage rates are likely to set record lows in August for the third month in a row.

The 30-year fixed-rate mortgage averaged 3.18% APR in July, a record low in NerdWallet's mortgage rate survey. The average rate tumbled 15 basis points compared with June, which at the time had the record low monthly average.

The recession has caused rates to fall

Mortgage rates fall when the economy stalls. And the economy has been sputtering for months as the COVID-19 pandemic sent millions of people to the ranks of the unemployed.

The U.S. economy shrank at a 32.9% annual rate from April through June, the Commerce Department reported July 30. The slowdown happened because businesses, state and local governments, and consumers cut their spending. Consumers cut way back on clothing and footwear purchases, among other items.

Good news for refinancers, hard times for others

The COVID-19 pandemic has helped some homeowners while injuring others, and it may harm many renters as well.

Among the beneficiaries are homeowners with high credit scores who haven't suffered interruptions in income. They have met the qualifications to refinance their mortgages at record-low interest rates.

Home sellers have thrived in many housing markets, as home prices have risen despite surging unemployment, an unusual combination. Home resale prices were up 3.5% in June, compared with a year before, according to the National Association of Realtors. One reason for the increase in prices: Fewer homes were for sale because of social distancing. The reduced supply of for-sale houses led to increased competition among buyers, pushing prices upward.

Homeowners must catch up on missed payments

But the COVID-19 recession may end up harming more homeowners than it helps.

In late July, 3.9 million homeowners were using mortgage relief plans that allow borrowers to miss payments or make partial payments if they have been affected by COVID-19, according to the Mortgage Bankers Association. Eventually, those homeowners will be expected to catch up on their missed payments. Some homeowners' incomes were permanently reduced. They may find it difficult to make good on their past-due payments.

Renters could be out in the cold

Renters could end up suffering the most. According to the U.S. Census Bureau’s Household Pulse Survey, 18% of renters, or 13.3 million households, didn't pay their full rent in June. And in mid-July, one-third of renters surveyed, representing 23.8 million households, told the bureau that they had no confidence or slight confidence that they would make their next rent payment.

Congress, along with state and local governments, imposed limits on evictions early in the pandemic, but some of those protections have expired. On top of that, $600 extra weekly unemployment insurance payments were set to expire at the end of July, and as the clock ticked down to the August recess, Congress was still negotiating an extension.

Even with tenant protections in place, about 4% of renters have received an eviction notice or have been threatened with eviction since March, according to data from the Urban Institute’s Coronavirus Tracking Survey.

When eviction bans expire, tenants have few options:

  • Apply for emergency rental assistance, if the state or city offers it and still has money.

  • Reach a repayment agreement with the landlord. Under such an agreement, tenants pay extra each month until they catch up with the past-due rent. But a repayment plan requires the tenant to have the money and the landlord to be willing to make a deal. Neither of those is a sure thing.

If it's not swamped with similar requests, the local legal aid service might be able to step in and help negotiate a deal with the landlord.

We want to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and safe by following our posting guidelines, and avoid disclosing personal or sensitive information such as bank account or phone numbers. Any comments posted under NerdWallet’s official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise.