October 29, 2014
Our discussion last week of mortgage rate trends going into this week’s Fed announcement included the notion that mortgage rates might retreat into a defensive posture–defensive as in, little change (if any) in the two trading days leading into Wednesday’s scheduled announcement by the Fed.
When the word came from the Fed on Wednesday, talk included the end of the Fed’s Quantitative Easing (QE) program. QE saw the government putting billions of dollars into markets in order to help stabilize the nation economically. Those investments affected mortgage rates, but when talk began of tapering off the program and eventually ending it, investor reaction was negative. Mortgage loan rates can and did move higher with more talk of the ifs and whens of the end of that program.
Today following the Fed announcement, mortgage loan rates hit three-week highs. Some believe the rates could improve based on the observation that in times like this, kneed-jerk investor reaction to the news can push rates up higher than they would be if cooler heads prevailed. It will take some time before we see which way rates could move in the wake of today’s Fed announcement.
30-year fixed rate conventional mortgages are back in the 4% best execution range, but for now, FHA mortgage loan interest rates best execution-wise are still offered by some lenders to well-qualified borrowers at 3.5%.
If upward pressure continues after today, FHA mortgage loan interest rates could begin a move out of the single 3.5% and into a range ofbest execution rates with the current best execution rate at the low end. If rates resist further upward movement, 3.5% may stick around a while longer for FHA rates, assuming no other factors change the game for rates in general.
Only time will tell how today’s Fed announcement affects rates outside the short-term, but at the time of this writing, 3.5% or higher is still the average best execution rate for extremely well qualified FHA loan applicants. Best execution rates are not available from all lenders or to all borrowers. Your personal experience may vary based on FICO scores, the availability of a participating lender, and other financial qualifications.
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.
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