October 23, 2014
This time last week, we reported mortgage rates headed for lower territory thanks to a variety of factors including market volatility. This week, the difference was definitely noticeable, with rates holding steady or edging slightly higher, but still maintaining at-or-below 4% rates for 30-year fixed rate conventional loans (best execution). FHA rates held steady at 3.5% best execution.
While FHA mortgage rates have managed to stay at 3.5% this week, how long that could number may persist? Next week is poised to be an important one for rates in the short term. Why?
There are a number of reasons why conditions might lead interest rates upward, but one of the most anticipated things scheduled for next week is the Fed announcement–a regular occurrence that can and often does push rates depending on the contents of that announcement.
No matter which way things go, we can theoretically anticipate some of next week’s rate behavior; ahead of the Fed announcement, markets sometimes go into a defensive posture. “Defensive” simply means there might be little or no rate movement ahead of the Fed. Or markets could be volatile as they were last week depending on conditions. Past performance is no indicator of future results, but some borrowers might not even want to bother waiting to see what happens with rates next week–at 3.5%, best execution, now is a very good time to think about committing to a home loan.
You might not be sure which is the right thing to do, get an interest rate lock or “float” into next week hoping rates might go lower once more. But there’s no guarantee that will or won’t happen. You can make an educated guess (such as our speculation that rates could go into a defensive posture until after Wednesday’s Fed announcement) but guesswork isn’t risk-free.
Many industry professionals advise against floating ahead of a Fed announcement, but in the end, it’s up to the borrower to decide. As it stands, the FHA loan best execution rate of 3.5% is very attractive to qualified borrowers who examined their options earlier this year when rates were at 3.75% or higher.
Remember, all the rates we mention here are discussed as “best execution rates” which assumes ideal conditions such as a very qualified borrower with outstanding FICO scores. These rates aren’t available to all borrowers or from all lenders. Your experience may vary.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: