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Huge gift for borrowers: Mortgage rates bottom out ahead of the holidays

Ethan Rotberg
·3 min read
Huge gift for borrowers: Mortgage rates bottom out ahead of the holidays
Huge gift for borrowers: Mortgage rates bottom out ahead of the holidays

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

financial documents with magnifying glass over them
Fariz Alikishibayov / Shutterstock

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

portrait of brunette man in a surgical bandage on a background of a modern building, coronavirus, illness, infection, quarantine, medical mask
LL_studio / Shutterstock

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

Young married couple doing their paperwork together, paying bills online.
Dragana Gordic / Shutterstock

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.

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XL Fleet fills “The Gap” in the EV revolution, and that has huge long-term implications for XL stock. Hybrid First, Electric Second To be sure, XL Fleet’s powertrains are not fully electric. They are hybrid. That’s why they work as a plug-and-play solution in current auto manufacturing plants. But hybrid is better than nothing – and given that EV production capacity is still decades away from being fully capable of supplying the entire auto market, XL Fleet’s hybrid powertrains are a huge step in the right direction, and a highly attractive, scalable solution for fleet operators today. That’s why XL Fleet has amassed an unrivaled blue-chip customer base over the past few years, the likes of which includes FedEx (NYSE:FDX), Coca-Cola (NYSE:KO), PepsiCo (NYSE:PEP), and Verizon (NYSE:VZ). These major corporations see XL powertrains as an optimal way to cheapen and accelerate their path towards being reducing emissions. Thereafter, XL Fleet will create a path for them to go fully electric. That’s because XL Fleet is developing a fully electric version of its plug-and-play XL powertrain. That fully electric powertrain could very well turn into the foundational technology upon which a big chunk of tomorrow’s electric fleets are built. If that does happen — and the odds are in XL Fleet’s favor — then XL stock will soar to $80 in the long run (at least). XL Stock to $80? According to Bloomberg NEF – one of the most qualified clean energy research firms in the world that always seems to spot-on about the EV revolution – less than 10% of medium-duty commercial vehicle sales in 2030 will be electric. That means 90% won’t be electric, equating to over 1.5 million medium-duty trucks, the vast majority of whom will be looking for alternative decarbonization routes. The fastest option? The most cost-effective option? The most proven option? The best option? XL powertrains. Even if XL Fleets nabs just 10% of this market, that implies over 150,000 powertrain deliveries in 2030, which my numbers say could flow into nearly $4 billion in revenues and $550 million in net profits. A 20X multiple on that implies a potential future valuation of $11 billion. Based on the current fully diluted share count, that implies a long-term price target for XL stock of roughly $80. Could the XL Stock Price Hit $100? Importantly, my $80 long-term price target on XL stock doesn’t include any penetration into the heavy-duty market, for which XL Fleet is designing a new eco-friendly powertrain platform that is expected to launch soon. Nor does it include XL Fleet’s fully electric powertrain concept, which is also expected to come-to-market soon. Both of those new products represent significant addressable market expansions – and could end up being game changers in their own right. They could easily add another few billion dollars in revenue (at least) and few hundred million dollars in profits (again, at least). If profits do run to $1 billion by 2030, then this is a potential $20-plus billion company in the making (using a 20X multiple). That equates to a future XL stock price of $140. Bottom Line on XL Stock By filling “The Gap” in the EV Revolution, XL Fleet could one day turn into an enormous company at the epicenter of fleet electrification — and XL stock could turn into your next big winner. On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. The New Daily 10X Stock Report: Dozens of triple-digit winners, peak gains as high as 926%… 1,326%… and 1,392%. InvestorPlace’s bold new initiative delivers one breakthrough stock recommendation every trading day, targeting gains of 5X… 10X… even 15X and beyond. Now, for a limited time, you can get in for just $19. Click here to find out how. In addition, you can sign up for Luke’s free Hypergrowth Investing newsletter. Click here to sign up now. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post By Filling ‘The Gap’ in the Electric Revolution, XL Stock Will Soar Above $100 appeared first on InvestorPlace.

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