February 1, 2016
Friday saw mortgage rates moving decisively lower. Some very competitive lenders are offering best execution rates at 3.625% for 30-year fixed rate conventional mortgages according to our sources, but a more likely best execution rate on this type of home loan is around 3.75%. FHA mortgage loan rates are, best execution, still holding in the 3.5% comfort zone.
But if there continues to be strong improvement in rates, or smaller amounts of improvement over a sustained period of time, we could see FHA rates break out into a range of rates with 3.5% at the upper end.
Remember, best-execution rates are not available to all borrowers or from all financial institutions. Your FICO scores and other financial qualifications will be an important factor in your access to rates like these. Your experience may vary.
What prompted the decisive move lower for mortgage loan rates? There is a great amount of financial turmoil abroad at the moment, and what is bad for economies is often good for mortgage rates. Industry pros aren’t willing to call Friday’s improvement the start of a definite trend lower for mortgage rates–there are too many variables at work that haven’t played out yet and many are looking to the short-term trends of next week to see which way the wind is blowing.
Some encouraged borrowers who have not committed to a mortgage rate lock yet to “float” until Monday morning but with rates at the lows they are now, it seems obvious that there’s nothing wrong with making commitment with your lender to lock in rates even if there are indications that they might improve a bit more–some sources are labeling Friday’s rate movement as an “eight month low” and for some, any move well below the four percent range is a strong encouragement to lock.
Floating is never without a degree of risk even when things seem like they might continue to improve. Breaking news, unexpected financial headlines and economic data releases can all push rates up or down without warning. Borrowers should definitely ask the advice of their loan officer when trying to decide whether to float or lock.
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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