Here's a big reason to be jolly if you're a homeowner or homebuyer: Mortgage rates are heading into the holidays at their lowest mark yet and have plunged more than a full percentage point from a year ago, according to a popular survey.
Owners can give themselves the gift of a sharply reduced monthly mortgage payment in the new year by refinancing now to a much lower interest rate. Prospective buyers hoping to be in a new home in 2021 can combat rising housing prices with dirt-cheap mortgage rates.
The record-low rates come as U.S. coronavirus cases continue to spiral out of control, and as Washington attempts to finalize a colossal COVID relief package. Amid all of the uncertainty, it's difficult to predict whether today's ultra-low rates will stick around.
Rates keep shrinking
Mortgage rates this week are at an average 2.66% for a 30-year fixed-rate home loan, a tick down from last week's 2.67%, mortgage company Freddie Mac said on Thursday.
It's the 16th time this year that rates have hit an all-time low, says the mortgage giant, which began keeping records nearly 50 years ago. At this time last year, mortgage rates averaged 3.74%, well over a full percentage point above where they are today.
"The housing market is poised to finish the year strong as low mortgage rates continue to fuel homebuyer demand and refinance activity," said Sam Khater, Freddie Mac's chief economist.
But outside of the housing market, the economy continues to be held back by new lockdowns across the country. The government says another 803,000 Americans filed for unemployment last week, and 12 million face the threat of losing their jobless benefits on the day after Christmas.
COVID is the key to where rates go
But it's the ongoing health crisis that will have the greatest impact on rates heading into 2021, says Khater.
"The key driver in the near term will be the trajectory of the COVID-19 pandemic and the execution of the vaccine," he says.
Rates on other popular home loans also dipped this week, the Freddie Mac survey shows.
The average for a 15-year fixed-rate mortgage - a popular loan choice for refinancing - decreased to a record-low 2.19%, down from 2.21% last week. Those loans are now down a full percentage point compared to the same period last year.
For 5/1 adjustable-rate mortgages, or ARMs, the current average is unchanged from last week, at 2.79%, far below last year's average of 3.45%.
How to save the most on your mortgage
Many homeowners have been unwrapping shiny new mortgages with rock-bottom rates, as refi requests are pouring in at a 124% higher clip than a year ago, according to the Mortgage Bankers Association.
But, even after months and months of sinking rates, many are still procrastinating. More than 19 million mortgage holders could save an average $308 per month by refinancing now, according to Black Knight.
The mortgage technology and data provider says homeowners with solid credit scores and at least 20% home equity are excellent refi candidates.
The best way to score a super-low lowest rate? You need to spend a few minutes shopping around, because some lenders have been raising their refinance rates to factor in a 0.5% fee on refi loans that took effect on Dec. 1.
When you compare a minimum of five rate quotes, studies show, you have a good chance of saving thousands of dollars over the life of your loan.
If you wait too long and miss on the lowest rates ever, there are other ways to trim your housing costs. When it's time to buy or renew your homeowners insurance, get quotes from several insurers to get the lowest price for the coverage you need.