May 26, 2016
Ever since the release of the Fed minutes earlier this month there has been upward pressure on mortgage loan rates. The Fed is considering another interest rate hike sooner rather than later, and while a Fed rate hike is not a direct adjustment of mortgage loan rates, investor reaction to the hike and market activity can and often does react accordingly when the Fed acts in this way.
In the last five business days there was only one day of recovery, while the rest of the time we’ve seen either “sideways” movement where rates didn’t change that much (best execution) overall but may have varied more among certain lenders.
Wednesday saw rates moving sideways to slightly higher depending on the lender. 30-year fixed rate conventional mortgages had been operating in a range between 3.625% among some more competitive lenders (best execution) and 3.75% for others. The number of those offering 3.625% has likely shrunk since the five day trends we’re discussing here. Best execution-wise, 3.75% is the more widely available rate at the time of this writing.
FHA mortgage rates are still holding steady in a best execution range between 3.25% and 3.5%. If upward pressure continues we could see that range disappear in favor of either 3.5% or a range with that number at the low end. Much depends on how things go over the next few days. Dramatic shifts in mortgage rates can push FHA rates faster, but more gradual changes often take time to catch up with participating FHA lenders.
Mortgage loan rates tend to vary more among participating FHA lenders, and best execution rates are not available to all borrowers or from all lenders. Your experience may vary and your financial qualifications will play an important part in your ability to access the rates you see here. FICO scores, loan repayment history, and other factors will all figure into the rate you are offered by the lender.
The lock/float question is an important one even in the best of times, but in the current rate environment it’s best to have a conversation with your lender before deciding to hold off on a mortgage loan interest rate lock commitment. Things can change quickly and floating is never free from risk.
Should you be tempted to float, it’s best to decide how high rates might climb before you cut your losses and commit. Those who can afford more risk may be tempted to float a bit longer, but those who can’t should discuss their options with the loan officer.
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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