August 5, 2015
Mortgage loan interest rates have been recovering, but on Tuesday the Fed’s discussion of a possible September interest rate hike caused a reaction that brought rates higher. 30-year fixed rate conventional mortgage loan interest rates, best execution, moved back to 4.0% after a brief flirtation with the high three percent range, though some lenders may still be offering sub 4% rates to the most qualified applicants.
At the time of this writing, FHA best execution rates are still at 3.75% which is a change from the previously held range of rates with 4.0% at the upper end.
Remember, best execution means rates that are offered to borrowers with ideal financial qualifications. Your FICO scores, plus other financial qualifications, will determine your access to rates or rates similar to them. Your experience may vary and may depend on the availability of a participating lender.
One thing that’s important to note about issues like the Fed and it’s discussion of rate hikes; Fed policy does not necessarily directly alter mortgage loan rates when it comes to discussion of the timing of a new interest rate hike. But investor reaction to such discussions often does affect mortgage loan interest rates, and that’s the factor that you should look at when it comes to data releases, talk of new or altered Fed policy, etc.
We saw a more prolonged version of this when the Fed was discussing the end of a program called Quantitative Easing–any talk of ending the program, for a time, resulted in a knee-jerk reaction from investors that had an effect on mortgage rates. Until rates are actually changed, this cause-and-effect situation may continue to affect rates depending on the substance of Fed announcements or discussions about a future interest rate hike.
That’s important when trying to decide whether to lock or float–are you floating ahead of a new Fed announcement or economic data release? Knowing how such events could affect your decision is quite important. It’s never a bad idea to ask for advice or do some additional research into the current rate environment before making your choice.
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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