January 17, 2015
Mortgage loan rates this week were described by some sources at “near 20-month lows”. This week mortgage loan rates, best execution, benefitted from some volatility that can and often does bring a correction to push the rates back into more realistic territory. 30-year fixed rate conventional mortgage loan best execution rates approached 3.5% for some extremely well qualified borrowers applying with lenders offering that possibility.
However, on Friday a slight correction did come, bringing the best execution rate back up into 3.625% territory. That rate is a best execution rate and is not available to all borrowers or from all lenders. Your FICO scores and loan repayment history will affect your ability to access that rate. Even so, borrowers who were offered higher rates than the best execution numbers still saw a benefit in many cases from this week’s lower rates. But what did FHA mortgage rates do during all this?
FHA rates have remained in their best execution comfort zone of 3.25% for some time. Again, not all borrowers can get that rate and not all lenders offer it. There is greater variation for FHA mortgage loan rates among lenders than with 30-year conventional rates. FHA rates may remain in a “comfort zone” like this while conventional rates get better or worse until there’s enough momentum to push the FHA rates into new territory. We could see changes in the FHA rates if the cumulative improvement of the last week continues into next week or there are developments that force a more drastic one-day change.
For now, borrowers who aren’t sure whether to float or lock should consider the advice of the market watchers who aren’t necessarily in agreement–some believe locking now is the best move considering the lows we’ve seen thus far in 2015. Others feel more improvements could be coming. Floating is always going to carry a degree of risk–if rates go higher, how much higher can you tolerate before you’ve missed out on more competitive rates? That is a very important question to ask yourself when trying to commit to a lock or a float with your interest rates.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for moderation.
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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