California December 2020 mortgage rates – refinance and purchase transactions.

Heading into the final month of 2020 we’re seeing increased risk for mortgage rates to move higher from their 2020 record lows. A stabilizing economy, more government stimulus, and multiple vaccines coming to market over the next few months are the events we’re looking at to see if mortgage rates move higher as we move into January 2021.

That being said; just because there are risks doesn’t mean mortgage rates in California are definitely going up from here. The reason is that there are no guarantees that the economy will remain somewhat stable, there is no guarantee that the federal government will actually produce an economic stimulus bill and the vaccines may take a lot longer to distribute.

For nearly 16 years my team and I have offered low mortgage rates, fast closings, and exceptional service throughout California. If you are looking to purchase a home in California or refinance a current mortgage please be sure to contact me directly (you can use the contact form below or call my direct number: 1-800-550-5538) for a no-cost/no-obligation quote.

2021 Conforming Loan Amount California

On November 24th the Federal Housing Finance Agency (FHFA) announced updated California Conforming loan limits for all 58 counties in California. The baseline limit increased to $548,250 and the jumbo-conforming loan limit increased to $822,375 (this is for “high cost” counties such as Alameda County and Los Angeles County).

The FHFA oversees Fannie Mae and Freddie Mac which means the 2021 conforming loan amount in California was raised for both agencies. This is a sizable increase from the 2020 limit of $510,400 baseline and in some high-cost counties, it was $765,600.

California Mortgage Calculator

Using a mortgage calculator to figure out your monthly payment is an essential part of buying a home in California or refinancing a current mortgage. Use our free mortgage calculator to help you determine what you can afford. With our online mortgage calculator, you can also factor in your property tax amount along with your annual homeowner’s insurance amount with your monthly mortgage payment.

Our California mortgage calculator is free and easy to use.

And our mortgage calculator is especially helpful for those who want to impound their property taxes and property insurance into their monthly mortgage payment. If you have any questions about or California mortgage calculator please don’t hesitate to ask.

December 2020 Mortgage Rate Forecast For California

Here are our latest December 2020 mortgage rate forecasts for California:

30-year fixed rates below 3.00%
20-year fixed rates below 2.875%
15-year fixed rates below 2.75%

This is based on properties in California, a loan amount of $325,000, a primary home, excellent credit (740 or higher credit score), and a Loan-To-Value ratio below 60% (purchase transactions). We may see days in which mortgage rates spike higher however overall we believe there will be opportunities to lock a mortgage rate at or below these levels throughout the month of December.

December 2020 Mortgage Rate Chart:

Here is a quick reference guide to December 2020 mortgage rate possibilities in California (these are not quotes; just examples) and the payments associated with each level based on various conforming loan amounts. See our important disclosure below.

30-Year Fixed-Rate Mortgage:

Term	Loan Amount	Mortgage Rate	Payment
30-year fixed	$240,000	2.625%	$963.96
30-year fixed	$340,000	2.625%	$1,365.61
30-year fixed	$440,000	2.625%	$1,767.26
30-year fixed	$540,000	2.625%	$2,168.91

20-Year Fixed-Rate Mortgage:

Term	Loan Amount	Mortgage Rate	Payment
20-year fixed	$240,000	2.50%	$1,271.77
20-year fixed	$340,000	2.50%	$1,801.67
20-year fixed	$440,000	2.50%	$2,331.57
20-year fixed	$540,000	2.50%	$2,861.48

15-Year Fixed-Rate Mortgage:

Term	Loan Amount	Mortgage Rate	Payment
15-year fixed	$240,000	2.25%	$1,572.20
15-year fixed	$340,000	2.25%	$2,227.29
15-year fixed	$440,000	2.25%	$2,882.37
15-year fixed	$540,000	2.25%	$3,537.46

Important Disclosure For December 2020 mortgage rates: The above is not a mortgage rate quote; nor is it an offer to lend. It’s only a generic example of various mortgage rates, loan amounts, and payments. Our mortgage rate chart is meant to educate and inform our readers. The current market may be higher or lower than the examples listed in these mortgage rate charts. Also; mortgage rates can and often do adjust multiple times a day.

Mortgage Rates And The Inauguration

Why is this something we are covering? Because even though the election has been over for nearly a month the President has yet to “concede” despite losing the recounts and just about every lawsuit. While we expect a smooth transition from one President to the next we can’t be certain of that until it happens or if in the coming week’s President Trump announces he concedes.

If everything continues to move forward with the transition and the markets still anticipate a smooth transition of power then this will have absolutely no impact on mortgage rates.

If not; then we could see some significant volatility with the markets and mortgage rates.

December 2020 Mortgage Rate FAQ’s

Here we answer some popular questions about mortgage rates in California.

What Is DTI?

DTI stands for Debt-To-Income ratio and is an important part of getting qualified for a new mortgage. Depending on the mortgage loan program your DTI can be as high as 50% and for some programs, it needs to be below 45% and in some instances below 42%.

What goes into the DTI calculation?

All credit card debt, car loans, student loans, personal loans, etc along with your monthly mortgage payment, property taxes (monthly amount calculated), and property insurance (monthly amount calculated). If you have HOA dues and/or Mortgage Insurance than that also gets factored in as well. Even if you don’t impound your monthly mortgage payment with property taxes and property insurance underwriting will still calculate the amount into your Debt-To-Income ratio.

What doesn’t go into the DTI calculation?

Things like cell phone bills, water bills – anything “utility” in nature. Also, general living expenses such as food shopping, gas for your car, and other daily/weekly/monthly general living expenses do not get factored into your DTI calculation.

Can Self-Employed Borrowers Still Get A Mortgage?

Absolutely! The process and requirements for getting a mortgage when you’re self-employed is a bit different than W2 borrowers but that’s to be expected when the income calculations are not as straightforward compared to wage earners.

Can I Get A Residential Mortgage On A Four-Unit Investment Property?

Residential mortgage loans cover one to four-unit properties for both primary residences and rental properties. So the answer to this question yes. Five or more units means you’ll have to look for a commercial property loan. An important point to remember about multi-unit properties is that they come with higher rates, especially when it’s a rental.

Is There A Pre-Payment Penalty?

If you work with JB Mortgage Capital, Inc. the simple answer is no. As of December 2020 (and it’s been that way for a long time!), none of our loan programs for refinancing or the purchase of a home (even for rental properties) come with a pre-payment penalty.

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Update Mortgage Guidelines December 2020

Heading into the month, mortgage guidelines remain similar to what we’ve seen in previous months. If there are any updates to this we’ll be sure to let you know.

Economic Calendar For December 2020

Here we cover the daily economic events that might impact mortgage rates. After the report comes out we’ll update the post with that information and comment on if there is a potential impact on the Mortgage-Backed Securities market and consumer mortgage rates.

To start things off we have:

ISM Manufacturing report
ADP Employment (sometimes comes out the day before the 1st of the month)
ISM Non-Manufacturing PMI
BLS Employment report

Wednesday – December 30th:

Chicago PMI: The Chicago PMI report for December increased to 59.5. There was no noticeable impact to mortgage rates post report.
Pending Home Sales: Pending Home Sales for November declined 2.6%

Wednesday – December 23rd:

MBA Refinance and Purchase Index: The MBS Refinance Index came in at 4169.00 after last week’s reading of 4014.5. The Purchase Index came in at 316.3 which is lower than the 331.6 from last week’s report.
Weekly Jobless Claims: The weekly Jobless Claims report remains elevated at 803,000 claims.
Durable Goods: In the most recent report, Durable Goods increased by 0.9%; last month the report showed a 1.3% increase.
Consumer Sentiment: Consumer Sentiment moved lower this month; 81.4 vs. 80.7.
New Home Sales: New Home Sales came in at 841,000 units (annual rate).
Monthly Home Prices: Year/Year Home prices came in at 10.2% (October 2019 vs October 2020).

Tuesday – December 22nd:

GDP Final Q3: The Final GDP Q3 report came in at 33.4%. A massive number that was no surprise to the market.
Existing Home Sales: Market participants are expecting the report to come in at 6,700,000 units (annual rate).

Thursday – December 17th:

Weekly Jobless Claims: The weekly jobless claims continue to increase. Last week it was 853,000 claims and this week it’s 885,000. Not good news for far too many people and hopefully this trend reverses soon.
Philly Fed Business Index: The Philly Fed Business Index came in at 11.1 which a big drop from last month’s reading of 26.3. Is the drop a one-time thing or is it the beginning of a move down? We’ll have to see what happens in January and February before answering that question.

Wednesday – December 16th:

Retail Sales: The retail sales picture continues to deteriorate with the report showing a decline of 1.1% and last month’s report was revised lower to a negative 0.1%. These are not the numbers you want to see heading into the biggest shopping months of the year.
Mortgage Applications: The MBA Purchase Index came in at 331.6 and the MBA Refinance Index came in at 4014.5. Both purchase and refinance applications remain strong.

Tuesday – December 15th:

Industrial Production: Last month the Industrial Production report came in at 1.1% and this month it came in at 0.4%.

Friday – December 11th:

Consumer Sentiment: The Consumer Sentiment report came in at 81.4 which is higher than the 76.9 reading from last month. Mortgage rates were not impacted by the report.
Core Producer Prices: The annual report came in at 1.4% and the month-to-month report came in at 0.1%. Overall prices remain stable heading into the last month of 2020.

Thursday – December 10th:

Consumer Price Index (CPI): Last month the CPI Index came in at 0.0% and this month it came in at 0.2% (monthly). The annual Core CPI came in at 1.6% which was in line with expectations.
Weekly Jobless Claims: Weekly jobless claims continue to get worse. Last week it came in at 725,000 claims and this week it came in at 853,000 claims. Continued claims also came in at higher, 5.5 million vs 5.7 million claims.

Wednesday – December 9th:

Mortgage Market Index: The MBA Refinance component came in at 3959.2, a bit higher when compared to last week, and the purchase component came in at 325.7 which was lower than last week’s reading of 342.9. There was no major impact to mortgage rates post report.

Friday – December 4th:

Employment Report: A big miss with the employment report. Expectations were for 469,000 jobs created (non-farm) and the report came in at 245,000 jobs created. Bonds sold off post report and may end up pushing mortgage rates higher if the selling continues. More on the report below.

Thursday – December 3rd:

Weekly Jobless Claims: The weekly Jobless Claims report came in at 725,000 claims filed with continued claims coming in at 5,520,000.
ISM Non-Manufacturing PMI: The report came in about the same as last month (55.9 vs 56.0).

Wednesday – December 2nd:

ADP National Employment: Last month the ADP Employment report came in at 365,000 jobs created and this month it came in at 307,000 jobs created. This is something to keep an eye on as the trend with this report over the last several months has been lower which is bad news for the economy.
MBA Purchase and Refinance Index: The MBA Purchase index came in at 342.9 (up from last week’s reading of 314.6) and the Refinance Index came in at 3891.1 (down from last week’s reading of 4077.7).

Tuesday – December 1st:

Chicago PMI: The Chicago PMI report came in lower than last month, 61.1 vs 58.2. There was no notable impact on mortgage rates.
Pending Home Sales: It appears Pending Home Sales are starting to decline as the most recent report showed a 1.1% decline compared to the previous month.

December 2020 Fed Meeting

The December 15th/16th Fed Meeting is not expected to produce anything major in terms of its impact on mortgage rates. We’ll update this section post-meeting.

Check out our latest post on the December 2020 Fed meeting.

Mortgage Rates And The Monthly Jobs Report

On Friday, December 4th is the monthly jobs report. Last month 906,000 jobs were created and this month the markets are expecting to see 469,000 jobs created, a 6.8% unemployment rate, and a wage increase of 0.1%.

UPDATE:

The jobs report is out and it was a big disappointment. Expectations were for 469,000 (non-farm payrolls) jobs created however the report came in significantly lower; 245,000 jobs created.

What does this mean for mortgage rates?

If you’ve been following our posts and articles then you know bad economic news is generally good for mortgage rates. But this report is not good for mortgage rates due to the unique situation we face with the COVID pandemic.

Without the pandemic; mortgage rates might improve post report…so what’s the difference?

The difference is government stimulus. Prior to the report many analysts and investors were anticipating a much smaller stimulus program however now investors are fearful that the stimulus program will be significantly larger.

And that’s a problem for mortgage rates because more stimulus means more government debt. More government debt means there will be less money to invest in Mortgage Backed Securities. And when fewer investors invest in MBS that means the market sells off and mortgage rates go higher.

Is it a for sure thing? No, but that’s the first reaction we’re seeing post report (bonds are selling off).

December 2020 Mortgage Rate Average In California

We’ll update this section as we move further into December however to start off the month we’re seeing the following averages.

The average 30-year fixed mortgage rate in California is 2.75%.
The average 20-year fixed mortgage rate is 2.625%.
The average 15-year fixed rate in California is 2.50%.

This is an average of everyone we’re seeing; from less than perfect credit to excellent credit. Please keep in mind that December 2020 mortgage rates adjust daily; sometimes multiple times during a day. For a mortgage quote specific to your situation please be sure to contact us directly.

Mortgage-Backed Securities & Treasury Snapshot:

December 28th – December 30th:

Mortgage-Backed Security UMBS 2.0 started the week at the 103.45 level and the UMBS 2.5 coupon started at the 105.08 level. The 10y Treasury yield was at the .95% level to start the week.

At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 103.75 level and the UMBS 2.5 coupon was nearing the 105.31 level. The 10y Treasury yield was at .92%.

December 21st – December 24th:

Mortgage-Backed Security UMBS 2.0 started the week at the 103.67 level and the UMBS 2.5 coupon started at the 105.19 level. The 10y Treasury yield was at the .89% level to start the week.

At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 103.55 level and the UMBS 2.5 coupon was nearing the 105.11 level. The 10y Treasury yield was at .92%.

December 14th – December 18th:

Mortgage-Backed Security UMBS 2.0 started the week at the 103.47 level and the UMBS 2.5 coupon started at the 104.76 level. The 10y Treasury yield was at the .93% level to start the week.

At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 103.55 level and the UMBS 2.5 coupon was nearing the 105.13 level. The 10y Treasury yield was at .95%.

December 7th – December 11th:

Mortgage-Backed Security UMBS 2.0 started the week at the 103.60 level and the UMBS 2.5 coupon started at the 104.84 level. The 10y Treasury yield was at the .94% level to start the week.

At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 103.56 level and the UMBS 2.5 coupon was nearing the 104.75 level. The 10y Treasury yield was at .89.

December 1st – December 4th:

Mortgage-Backed Security UMBS 2.0 started the week at the 103.61 level and the UMBS 2.5 coupon started at the 104.75 level. The 10y Treasury yield was at the .91% level to start the week.

At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 103.47 level and the UMBS 2.5 coupon was nearing the 104.76 level. The 10y Treasury yield was at .96%.