Will mortgage rates in California go down, as we move further into 2021? Or will…
Key highlights from this report:
- California mortgage rates recently fell to another all-time record low.
- The average rate for a 30-year fixed loan dropped to 3.15% last week.
- That’s based on the weekly survey conducted by researchers at Freddie Mac.
If you follow mortgage industry trends, you might have a sense of deja vu around the phrase “record-low rates.” We’ve heard it many times over the past few weeks.
Well, here we go again. Mortgage rates in California and across the nation sank again last week, hitting yet another all-time record low.
From an interest rate standpoint, summer 2020 is shaping up to be a great time to buy a home in California. We’ve never seen rates this low — ever — and they could sink even farther as we get into the summer months.
Record-Low Mortgage Rates in California: June 2020
On May 28, Freddie Mac reported another drop in mortgage rates in California and nationwide. This is based on their weekly (and widely cited) survey of the mortgage industry. Home loan rates have set several records this year, and last week was no exception.
To quote their May 28 report:
“The 30-year fixed-rate mortgage has again hit the lowest level in our survey’s nearly 50-year history, breaking the record for the third time in just the last few months.”
The average rate for a 30-year fixed home loan dropped to 3.15% last week, the lowest point in history (to date). But don’t get too attached to this latest record. It might be broken in the near future. Rates could fall further over the coming weeks, as we move into the summer of 2020.
The chart below shows the average rate for a 30-year fixed home loan over the past year, as of late May 2020. You’ll notice how much lower they are today (right side of chart) compared to a year ago.
For those who are in the market to buy or refinance a home in California, now could be a great time to do so. It’s a great opportunity to save on interest costs. Borrowers who use a fixed-rate mortgage can lock in at today’s historically rates and keep it for the life of the loan.
Note: Mortgage rates can vary from one loan to the next, for a number of reasons. The chart above shows nationwide averages. Please contact us if you’d like to know what kind of rate you can get, based on your situation.
Spurring a Rebound in the Housing Market?
Home buyers in California and elsewhere across the country have apparently taken notice of today’s low rates. Home purchase demand has increased in recent weeks, thanks to low borrowing costs and a gradual reopening of the economy.
As Freddie Mac’s research team wrote:
“These unprecedented [mortgage] rates have certainly made an impact as purchase demand rebounded from a 35 percent year-over-year decline in mid-April to an 8 percent increase as of last week.”
That’s a pretty remarkable turnaround, when you consider the sharp decline in economic activity that occurred during the same timeframe.
The Mortgage Bankers Association (MBA) also reported an uptick in demand among buyers who use home loans to finance their purchases. In their latest application survey, the MBA said that home loan applications from buyers rose 7% from the previous week, and 9% year over year.
This is a noteworthy trend, given the economic turmoil unfolding across the country. It’s also a ray of light. Record-low mortgage rates in California have helped boost demand in a sluggish real estate market. That, combined with the multi-stage reopening of the economy, could help pull the state’s economy out of its stagnation later this year.
Joel Kan, MBA’s head of economic forecasting, recently stated:
“The housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search.”
California is one of those states that are reopening their economies. According to the state’s “Resilience Roadmap,” we are currently in stage two of a four-staged reopening plan. In stage two, additional businesses are being allowed to reopen on a county-by-county basis.
A Good Time to Buy or Refinance a Home
California’s economy continues to struggle, and it will take some time to right the ship again. The state’s unemployment has risen sharply in recent weeks, largely due to forced closures resulting from the COVID-19 situation.
But for those mortgage shoppers who have steady income and employment, now could be a great time to take out that loan.
- Refinancing: On the refinance side of things, homeowners are actually benefitting from two things. Home prices in most California cities have risen steadily over the past few years, boosting equity for homeowners. And mortgage rates have sunk to record lows, as mentioned above.
- Buying: Home buyers can also benefit from today’s low mortgage rates. Plus, there’s the added advantage of having less competition. While home-buying activity has ticked up in recent weeks, it’s still below what is considered “normal” for this time of year. So there aren’t as many competing home buyers. For some folks, now could be a great time to enter the housing market.
Have mortgage questions? We’re here for you. Bridgepoint Funding has been meeting the mortgage needs of Californians for nearly 20 years. Please contact us with any financing-related questions you have.