September 26, 2014
September has been a rough month for FHA mortgage loan rates–there’s been an upward trend fueled at least in part by the recent Fed policy statement, which many anticipated as a possible indicator of where rates might be headed (predicting investor reaction to an announcement that indicated a stronger or weaker economy).
But this week, we saw rates moving lower–the best execution numbers haven’t really changed, but the downward trend is a welcome one. In many cases borrowers will see the lower moves reflected in closing costs rather than in actual lower interest rates, but if the downward movement continues we may well see FHA rates shift out of their current range of numbers and back into the lower best execution rate of 3.75%.
The downward trend we saw this week began last Friday, and this week we saw rates fall to two-week lows. But on Wednesday that improvement hit a snag–market watchers aren’t sure what happens next, but 30-year fixed rate conventional mortgages were close to falling back to their earlier best execution rate of 4.125%.
That number–along with the FHA 3.75% best execution rate–persisted for much of the summer, but while rates are falling as gradually as they began rising, it’s not really certain whether the current trend is just a pause in the upward movement of rates or if there’s a real correction against that upward trend.
We’ve seen rates move in a very narrow range for an extended period of time. What will it take to get a better number? What market forces could push rates higher than we’ve seen in the last several months?
Advice on floating or locking is mixed, but there’s always a risk involved either way. If you “float” in current conditions you risk a higher rate should conditions put upward pressure on rates. Lock now and you could miss out on lower rates if things trend lower, but there’s less risk overall with floating since rates are still at comparatively low levels when viewed against years past.
Here are the mortgage loan rate averages for the week of September 22 2014. The rates listed here are best execution rates–your access to them depends on your FICO scores, loan repayment history and other factors. These rates are not available from all lenders or to all borrowers. Your experience may vary.
- 30-year Fixed Rate Mortgages: 4.25% or higher
- FHA Mortgage Rates: Between 3.75%-4.0% (or higher depending on the lender)
- 15-year Fixed Rate Mortgages: 3.375% to 3.5% or higher
- Five-year Adjustable Rate Mortgages: Between 3.0% and 3.50% depending on the lender
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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