Bay Area Refinance Alert: Mortgage Rates Dropping in Summer 2020

Key highlights from this mortgage report:

• Bay Area homeowners are taking advantage of recored low rates.
• Mortgage rates dropped to another all-time record low in July 2020.
• They’re currently averaging around 3% for a 30-year fixed home loan.
• With such low rates, now could be a great time to refinance in the Bay Area.

Homeowners in the Bay Area and across California should know that refinance rates have dropped — again. This is based on two prominent surveys, one of which was updated earlier today.

With the average rate for a 30-year fixed mortgage hovering around 3%, now could be a good time to refinance in the San Francisco Bay Area. Here are the latest trends you need to know about, as of summer 2020.

Update: Rates fell below 3% in late July

Bay Area Refinance Rates Drop to Record Low

“Another all-time record low.”

That’s a phrase we’ve been hearing a lot over the past few weeks, when it comes to mortgage rates. And it made another appearance earlier today, with the publication of a new survey.

On July 9, the research team at Freddie Mac reported that the average rate for a 30-year fixed mortgage loan dropped to 3.03%. That marked a decline of four basis points (or 0.04%) from the previous week’s average of 3.07%. It also sets another all-time record low, a record that could be surpassed next week if interest rates continue to fall.

It bears repeating: We are currently seeing the lowest Bay Area refinance rates in recorded history. Homeowners who are thinking about refinancing their current mortgage loans might want to take notice of this trend. Summer 2020 has shaped up to be a good time to refinance in the Bay Area, and elsewhere across California. But we don’t know how long it will last.

Another leading survey updated this week showed an even lower average rate for 30-year fixed mortgage loans. According to that survey, maintained by the industry news site Mortgage News Daily, 30-year mortgage rates were hovering around 2.9% during the week of July 9, 2020.

Of course, these are just averages for the Bay Area and nationwide. The actual rate you receive on a loan could differ from these averages, for a number of reason. For example, some borrowers choose to pay points in order to secure a lower rate, while others don’t. Other factors, like credit scores, can affect the rate you receive on a home loan.

The bottom line here is that mortgage rates remain attractive for Bay Area home buyers and homeowners alike. From an interest perspective, now could be a great time to buy or refinance a home in our area.

A Favorable Forecast for Borrowers

So, Bay Area mortgage refinancing rates have dropped to another record low. That’s where we are right now. But what does the future hold? Is now the best time to refinance your home, as of summer 2020? Or should you wait to see if rates drop even lower during the latter part of the year?

Unfortunately, there’s no way to predict what interest rates will do from one week or month to the next. They change constantly and are influenced by a wide variety of factors (including everything from location to the loan amount). So it’s nearly impossible to say whether Bay Area refinance rates will be higher or lower as we move into the second half of 2020.

With that said, a couple of notable forecasts have predicted that mortgage rates could hover within their current low range through the end of 2020 and into 2021. That’s partly the result of Federal Reserve policy. Fed officials are currently holding the federal funds rate near zero, which has an indirect effect on home loan rates.

Notable forecasts include:

• The Mortgage Bankers Association (MBA) recently predicted that 30-year loan rates would average somewhere between 3.3% and 3.4% through 2020 and into 2021.
• In a quarterly housing and economic forecast published in June, Freddie Mac’s researchers made a similar prediction.

But mortgage purchase and refinance rates have already dipped to the 3.0% range, during first part of July. So these forecast might be running a bit high.

The key takeaway here is that Bay Area mortgage refinancing rates have entered uncharted territory. Never before have we seen the average drop into the 3% range for a 30-year fixed mortgage loan. And there are still many homeowners in the area who could take advantage.

According to a recent statement from Joel Kan, an economist for the MBA:

“Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment.”

Will a Refi Work for You in 2020?

Bay Area homeowners refinance their homes for different reasons. But the most common reason for pursuing a refi is to secure a lower mortgage rate on the new loan, thereby saving money over the long term.

The first step is to find out if refinancing will work to your advantage. You do this by comparing your closing costs to the amount of money you’ll save each month going forward. If you stay in the home (and keep the new loan) long enough, you’ll eventually save more than what you spent to refinance. This is known as the break-even point.

Refinancing works for some Bay Area homeowners but not for others. Every situation is different. And that’s why it is so important to speak with a mortgage professional, like the knowledgeable staff at Bridgepoint Funding.

Ask us! We can review your current mortgage situation to see if now might be a good time to refinance. We are located in the Bay Area and serve the entire state of California. Contact us today with any questions you have.