April 22, 2016
Mortgage rates are definitely in an upward trend, short term, which some market watchers blame in part on bond market activity.
The European Central Bank (ECB) meeting this week was also a possible factor; some financial headlines indicate that markets were “mixed” in Europe following the scheduled event. Regardless of how much or how little that may have changed rates here in the the U.S. mortgage loan rates are at the time of this writing being reported at four-week highs.
30-year fixed rate conventional mortgages are at a best execution range between 3.625% and 3.75%. More significantly, FHA rates have broken into a range of rates with the previously held 3.25% now at the bottom end of that range with 3.5% on the top side. FHA rates tend to change more slowly than conventional rates; Thursday’s move indicates a decisive upward trend in the short term.
The best execution rates you see here are not available to all borrowers or from all lenders. Your FICO scores and other financial qualifications will play a large role in determining your access to these rates. Your experience may vary depending on a variety of factors.
There is much advice to “lock” in the face of the current rate trend. Some industry professionals have stated that rates are still low, and that locking if you’re 30 days out makes sense. That’s the opinion of some professionals, while others may be convinced that floating under certain conditions might be worth the risk. Borrowers who aren’t sure what to do here, especially those with 30 or 60 days left until closing time, would do well to ask for some good advice and talk to their loan officer–floating is never risk free.
In the current rate environment it’s entirely possible that we could see a return to the lower levels of last week depending on market conditions, investor activity, etc. But economic data releases, world headlines and other factors could also conspire to keep upward pressure on rates in the short term.
Decide how high you’re willing to watch rates go before you commit with your lender to an interest rate lock. This makes the decision to float into a strategy rather than simple wishful thinking in hopes rates might return to previously held lows.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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