May 13, 2015
In spite of some domestic economic developments that should be helping rates move lower (or at least preventing a move higher) mortgage loan rates are moving higher–to the point where some market watchers are using the phrase “highest of 2015” to describe where the rates have gone.
Indeed, we’ve seen 30-year fixed rate conventional mortgage loan rates move up into the 4% zone, which is reported “best execution”. That means that outstanding financial qualifications are assumed including excellent FICO scores and loan repayment history. Borrowers with less-than-perfect credit are likely seeing rates above 4.0%.
FHA mortgage loan rates are holding for now at 3.75% best execution according to our sources, and again, that is for extremely well-qualified borrowers. There is greater variation for FHA mortgage loan interest rates among lenders than for their conventional counterparts; shopping around for the most competitive rates is strongly encouraged.
At the time of this writing, overseas economic developments and headlines about those developments have been influential. At home, a weaker-than-hoped-for economic data release that might normally have a greater effect has been shrugged off by the markets; you’ll find plenty of industry professionals saying “lock now” when it comes to making an interest rate commitment. Some, however, are looking to future developments (a Treasury auction set for Thursday) hoping that the reward of floating is worth the risk–IF the borrower has the “risk tolerance” to do so.
That’s a tough choice and shouldn’t be made without getting some sound advice or at least doing some research into the risks and rewards of doing so. Only the borrower can make this decision–make the most informed choice possible. It’s true that 3.75% for FHA rates (best execution) and 4.0% for conventional mortgage loans are still very good numbers, but if the rising trend continues it’s unclear how long “good” might remain. A pushback against this upward movement is always possible based on breaking news, scheduled economic data releases and other factors; keep watching the headlines to see which way the markets might be turning.
Do you have questions about FHA 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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