At a time when there’s plenty of economic “doom and gloom” in the news, we thought you might like a ray of light. Here’s some good news for Californians considering a home purchase or refinance in 2020. California mortgage rate trends have been favorable all year, and they’re expected to remain that way throughout the year.
Current California Mortgage Rate Trends: Spring 2020
Earlier this year, the Federal Reserve lowered the federal “funds rate” that banks use when conducting interbank transfers. This and other factors have led to a sharp decline in mortgage rates.
During the week ending on March 5, the average rate for a 30-year fixed mortgage loan in California and nationwide dropped to 3.29%. That was its lowest point in history, to date. And it could sink even lower in the coming weeks.
Rates have fluctuated a bit since that all-time low, but they’re still hovering below the 3.5% threshold (on average).
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The chart shown above is based on Freddie Mac’s Primary Mortgage Market Survey, or PMMS. This long-running survey tracks average interest rates for several different types of mortgage loans. This chart shows the average for 30-year fixed mortgage loans in particular (the most popular type of home loan in California).
Despite some ups and downs, California mortgage rate trends over the past year have followed an overall decline. This is true across all loan types, including the 15-year fixed and the 5-year adjustable (ARM) loan. California mortgage rate trends clearly favor borrowers right now.
Granted, the real estate market has slowed and unemployment has risen, due to government restrictions on business and movement. But those things won’t last forever. We could see some easing over the coming months, especially if coronavirus testing rates improve.
The bottom line: Our current economic restrictions are short-term. Homeownership, on the other hand, is a long-term strategy. And from a mortgage rate standpoint, now is a great time to pursue that goal.
Long-Range Forecast and Outlook
To recap, California mortgage rate trends remain favorable for borrowers. The popular 30-year home loan has been averaging well below 4% throughout 2020. And it’s even lower today, as of late April.
The question is, how long will this trend last? What’s the long-range outlook for mortgage rates in California and nationwide?
That’s a tough question to answer at the best of times. It’s even more difficult to answer now, because we are experiencing a period of economic uncertainty. But there appears to be some good news here as well, from a borrower’s standpoint.
Analysts from two mortgage-industry giants recently issued similar forecasts predicting that home loan rates would stay in their current low range for the foreseeable future.
Here’s a summary of those recent forecasts:
- On April 6, the Economic and Housing Research Group from Freddie Mac predicted that 30-year mortgage loan rates would average 3.2% during the last two quarters of 2020. Looking beyond that, they predicted a slight decline in rates going into 2021.
- Also in April, the research team from Fannie Mae made a similar prediction regarding California mortgage rate trends. They predicted the average rate for a 30-year fixed home loan could drop toward 3% by the end of 2020, and hover within that range into the start of 2021.
For Many Homeowners, Now Is a Good Time to Refinance
The downward trend of California mortgage rates has led to a surge in refinancing activity. Homeowners across the Golden State have rushed to take advantage of today’s low-rate environment.
In its latest survey update, issued last week, Freddie Mac’s research team pointed out that “refinance activity remains high” in California and nationwide.
Similarly, a report from the Mortgage Bankers Association (MBA) issued earlier today showed a sharp rise in refinance activity. According to the industry group’s weekly application survey, refinance loan applications were up by a whopping 225% last week compared to a year ago.
The MBA singled out California and Washington as leading the charge. They wrote: “California and Washington, two states hit hard by COVID-19, saw another week of rising activity — partly driving the overall increase.”
Keep points from this article:
- California mortgage rate trends remain favorable in spring 2020, with home loan rates hovering near historic lows.
- Mortgage rate forecasts for California and the nation suggest that these favorable trends could continue over the coming months.
- Despite some obvious challenges, real estate deals are still being conducted. Real estate is considered an “essential” business in our state. People are still selling and buying homes during the coronavirus crisis.
- Mortgage refinancing activity in California has risen sharply in recent weeks, compared to last year. That’s largely the result of a downward trend in home loan rates since the start of 2020.
Contact Us for a Rate Quote
Do you want to take advantage of current mortgage rate trends in California, by refinancing or purchasing a home? We can help. Bridgepoint Funding has been helping Californians with their mortgage needs for going on 20 years.
Please contact us if you would like to receive a quote, or even if you just have questions about the mortgage loan process!