June 16, 2015
Mortgage loan interest rates are holding steady ahead of an important and much anticipated announcement by the Fed on Wednesday. The Fed does not set mortgage loan interest rates, but as we have seen in the past with the Fed’s handing of Quantitative Easing (QE) that Fed announcements can and do cause a reaction in the markets that directly affect mortgage loan rates. So Wednesday will definitely be a day to watch.
At the time of this writing, we’re seeing some sources report best execution rates for 30-year fixed rate conventional mortgage loans at 4.125%, though others offer a best execution range with 4.25% at the top and 4.125% at the bottom. If the Fed were to announce a rate hike on Wednesday, that could bring higher mortgage loan rates along with it depending on investor reaction to the news. Currently FHA loan applicants are seeing (best execution) 3.75% depending on the lender.
It’s entirely possible that if conventional rates increase after Wednesday’s announcement that we’ll see FHA rates break out into a range with 3.75% at the low end at first. That’s happened before, but as always past performance is not a guarantee of future results; it’s just something to keep in mind.
Global financial news is also a factor; we’ve seen some uncertainty in Europe that has affected rates at home. If there’s breaking news tomorrow to compete with the Fed announcement, it’s anyone’s guess what might happen in the tug-of-war for attention that could result. Keep your eyes on the headlines tomorrow for both Fed news and any developments with the European Central Bank, Greece, or related headlines.
Industry professionals seem united in their advice–don’t “float” on a mortgage rate loan at the present time unless you can afford the losses should a big shift happen in the wake of tomorrow’s Fed announcement. Make the most informed choice you can, but consider that advice going in…
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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