November 7, 2016
Mortgage loan interest rates are not directly tied to things like scheduled economic data releases. Friday’s job report, for example, is not directly associated with rate movements, but investor reaction to such reports can and often does influence mortgage rates. The usual rule of thumb is, in general, what is bad for the economy often benefits interest rates.
So when you get good news (or at least, better news) in a job report, you could reasonably expect conditions to be favorable to higher mortgage rates assuming you use that rule of thumb.
But sometimes that rule won’t apply for one reason or another, and that was the case on Friday when mortgage rates improved slightly even though the jobs data was stronger than some thought it might be.
In this case, investors seemed to ignore the report in favor of other news developments, which is not at all unusual. But the overall result was borrowers getting slightly better closing costs where affected by Friday’s changes. The actual best-execution numbers are more or less the same; 30-year fixed rate conventional mortgages remain at or near 3.625%, and FHA mortgage loan interest rates remain in a comfort zone between 3.25% and 3.5%.
The rates you see listed here are best execution rates and assume an extremely well-qualified borrower with outstanding FICO scores and loan repayment history. These rates are not available to all borrowers or from all lenders-your experience may vary.
Those who aren’t sure about locking in a mortgage loan interest rate commitment with their lender or floating in hopes of improvement over the short term may find this a tricky environment to make the call in-the small ups and downs of the rates are likely to continue. As we get closer to the end of the year, some industry professionals note that the changes may be more measured and a desire to avoid volatility may bring more measured short-term rate changes by lenders unless market conditions change more radically.
In other words, there may be less of a motivation to accept the risk of floating since rate changes in the short term may only be small. Since rates are already considered lower compared to years past, the risks of floating might outweigh the rewards in the short term. If you aren’t sure which way to go, have a conversation with your loan officer for some good advice.
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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