December 10, 2014
Plunging oil prices—plus stock market reaction to those lower oil prices–are among the factors over the last five trading days that have affected FHA mortgage rates. FHA loan interest rates have fallen to year-long lows, best-execution.
There are other factors that can and do contribute to lower rates from day to day. One factor that could affect FHA loan rates this week is tomorrow’s 30-year Treasury auction. Borrowers who have not yet committed to an FHA mortgage rate lock should keep an eye on the news about that auction tomorrow to see how it may affect the current interest rate trend.
At the time if this writing, 30-year fixed rate conventional mortgage loan rates are in a range that tops out, best execution, at four percent. The bottom end of that best execution range is 3.875%. FHA mortgage loans are still within a range of rates between 3.25% and 3.5% (best execution).
As we’ve mentioned before, best execution rates are not available to all borrowers or from all lenders. A loan applicant’s FICO scores, loan repayment history and other financial qualifications will all play a part in the ability to access these mortgage loan rates.
What happens to the current downward trend in mortgage rates could depend on that previously mentioned 30-year Treasury auction on Thursday. Depending on the outcome of that auction and investor reaction to it, we could see the downward movement stop, or continue lower for yet another business day in a row.
Some industry professionals are advising borrowers to float in the very short term (into Thursday), but to pay close attention to the Treasury auction and be ready to act just in case.
Locking, which is when the borrower commits to an FHA mortgage loan rate with a lender in writing, or floating, which is defined as holding off on that commitment to see if conditions get any better, is a decision only the borrower can make. The timing is up to you. It’s always best to make the most informed decision as possible when it comes to locking or floating. The remainder of the week will be very interesting to watch as oil prices, the Treasury and world headlines all compete for investor attention.
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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