July 6, 2016
Tuesday marked the first day back from the long holiday weekend, and it brought with it lower rates. That makes seven consecutive business days in a row that mortgage loan rates have improved, and conventional rates are now in some cases, best execution, in line with FHA mortgage loan interest rates.
We’ve seen a general downward trend in mortgage loan rates ever since Britain voted “leave” in its national referendum on staying in or leaving the European Union. The fallout from the “leave” vote continues, and as a result the negative economic consequences have helped rates stay low.
30-year fixed rate conventional mortgages are being reported (at the time of this writing) between 3.25 and 3.375% best execution. Compare that to FHA best execution rates of 3.25% and it’s clear to see that rates are in a unique place at the moment. Earlier in the seven-day downward trend some market watchers were calling the trend “three year lows” and later, “all-time lows”.
(As always, the rates you see reported here are best execution rates and are not available from all lenders or to all borrowers. Your access to rates like these depends greatly on FICO scores and financial qualifications. Your experience may vary.)
Brexit is definitely a factor in all this, as mentioned above, but domestic economic data releases also play a role and it’s entirely possible the current levels could be disrupted by some other breaking news or scheduled data release that’s relevant to the market.
So locking or floating choices are tricky because, as some market watchers like to point out, there’s nothing wrong with playing it safe and locking with rates at such incredible lows. Some borrowers may be tempted to float, or hold off on an interest rate lock commitment with their lenders, but floating is never risk free and it should be decided in advance how high rates might go from their current position before the borrower decides to lock.
There’s no telling how long Brexit will continue to be a player in low rates. It’s sound strategy not to assume that today’s rates will be around indefinitely; we’ve seen market corrections before when rates get low and a bounce is likely inevitable at some point. The question is how long in the short term before that happens? And how long/high will the bounce go?
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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