June 20, 2016
At the end of the day on Friday, mortgage loan rates had moved higher, but not by much and certainly not enough to pull rates out of territory many are describing as “lowest in years”. In the past week or more we’ve seen rates move, at certain points, into lows that for conventional 30-year fixed rate mortgages actually rivals the FHA loan offerings which are typically lower.
Last week we saw 30-year fixed rate conventional mortgages move as low as 3.375% for some of the most competitive lenders, and around 3.625% for others, with a best execution average somewhere in the middle. This territory is in direct best execution competition (technically speaking) with FHA loans which are still in a best execution comfort zone between 3.25% and 3.5%. FHA loan interest rates can vary more among participating lenders, so it definitely pays to look for the best rates and terms.
And as always, the rates discussed here are considered “best execution rates” which are not available from all lenders or to all borrowers. Best execution rates are available to borrowers with outstanding FICO scores and other financial qualifications. Your experience may vary.
This week the “Brexit” question-whether Britain should leave the European Union-is potentially a huge spoiler for mortgage loan rates. Rates could go in either direction depending on whether or not the Brexit vote goes in a direction that favors mortgage loan rates.
And lest we forget, what is often bad for the economy is often good for rates, so this is an issue that doesn’t offer a lot in terms of specific causes and effects.
Investor reaction to the Brexit vote, no matter which way it goes, will be key in what happens to mortgage loan rates in the short term this week. Will there be a knee-jerk reaction to the vote no matter what it is? That is likely a safe assumption to make.
Chatter among industry pros this week includes the notion that “floating” isn’t such a great idea, especially when rates are already so low. Regardless of whether you decide to lock or float, it’s a good idea to have a discussion with your loan officer to get some good advice.
Floating may or may not be rewarded with better rates, and borrowers who do choose to float this week should set a limit on how high they’ll watch rates go before committing to the interest rate lock with their lender. A prepared borrower is usually much happier with the outcome of floating when such a strategy is used.
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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