Mortgage Rates Hit New Low, Refis Surge

Mortgage Weekly Update

We may be nearing the holidays, but the housing market isn’t slowing down. Mortgage activity increased 1.1% this week, with both refinance and purchase applications rising.

Refinances are currently 105% higher than one year ago, while purchase loan applications are up 26%. Overall, refinances made up 72.7% of all loan activity.

The jumps are likely due to continued low mortgage rates, which fell to another record low this week. According to the Mortgage Bankers Association’s weekly rates survey, the average rate on 30-year, fixed-rate mortgages fell to 2.85%.

“U.S. Treasury rates stayed low last week, in part due to uncertainty over the prospects of additional pandemic-related government stimulus, as well as concerns about the continued rise in COVID-19 cases across the country,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Homeowners once again acted on the decline in rates, with refinance activity rising for the second straight week and up 105% from a year ago.”  

The surge is a break from traditional norms. In most years, mortgage applications and homebuyer demand would decline in the winter. According to Kan, 2020 has bucked that trend.

“The ongoing strength in the housing market has carried into December,” Kan said. “Applications to buy a home increased for the fourth time in five weeks, as both conventional and government segments of the market saw gains. Government purchase applications rose for the sixth straight week to the highest level since June — perhaps a sign that more first-time buyers are entering the market.”

More in mortgage and housing news

  • Applications to purchase new construction homes surged 34.7% over the year in November, according to MBA. Roughly 827,000 new homes were sold in November. 
  • The share of mortgage loans in forbearance fell to 5.48% this week, down from 5.54% the week prior. About 2.7 million American homeowners are currently in forbearance.
  • In a letter sent to Treasury Secretary Steven Mnuchin this week, major mortgage industry players voiced their concerns about ending the conservatorship of Fannie Mae and Freddie Mac prematurely. The letter was sent after Mnuchin indicated he might approve a conservatorship release early.

This week in mortgage rates

Mortgage rates dropped on all mortgage products this week.

Here’s how rates looked for each loan type:

  • Conforming 30-year, fixed-rate loans: 2.85%, 0.33 points
  • Jumbo 30-year, fixed-rate loans: 3.12%
  • FHA 30-year, fixed-rate loans: 2.96%
  • 15-year, fixed-rate loans: 2.49%
  • 5/1 adjustable-rate loans: 2.58%

Make sure to check back here next week for the latest news on interest rates.

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.