November 25, 2015
Monday say mortgage rates moving slightly higher, while on Tuesday rates held steady. There’s some market volatility this week for reasons that include the Thanksgiving holiday–rates may well move into a defensive posture on Wednesday in anticipation of the down day on Thursday.
Add to that the uncertainty over a Fed interest rate hike in December and you have a combination of factors that equals a risky time to float, at least in the minds of some industry pros.
30-year fixed rate conventional mortgages are, at the time of this writing, between 4.0% and 4.125% depending on the lender (best execution). The rate changes we’ve seen this week so far may be reflected in closing costs rather than an actual higher interest rate, so borrowers should know that when they apply. Some of the smaller increases in interest rates are often reflected in this way.
FHA mortgage loan interest rates are holding in a best execution comfort zone of 3.75%. FHA rates may vary more among participating lenders than their conventional counterparts, and access to best execution rates depends greatly on the borrower’s FICO scores and other financial qualification. Your experience may vary. Best execution rates aren’t available to all borrowers or from all lenders.
Some professionals are advising borrowers to get an interest rate lock commitment from the lender now, especially those who are within 15-30 days of closing. Your degree of risk tolerance will determine how wise it is to “float” in the current rate environment, especially since the Fed rate hike issue is, in the short term, far from being put to rest one way or the other.
Ask some advice of your lender before deciding to lock or float. Floating is never without risk, but many agree that floating is riskier now in the short term given what we haven’t yet heard from the Fed about interest rates come December.
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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