June 21, 2016
Mortgage rates kicked off the week moving higher and faster than last Friday. The “Brexit” drama in Europe is partly to blame, as investor reaction to the economic uncertainty there influences mortgage rates here.
For a while, bond market activity in that regard was favorable to mortgage loan interest rates, but now the wind seems to be shifting directions.
The fact that investors don’t know what will happen with the Brexit (will Britain stay in the EU or depart?) and more importantly, don’t know what will happen economically as a result of whatever choice ends up being made is contributing to volatility and potential volatility between now and Brexit referendum time on Thursday.
There are some market watchers who are now saying that recent lows are likely as low as things will go, that a trend higher is, while not guaranteed, is probably going to happen in the short term. Brexit drama is an important factor. But it’s important to remember that other scheduled economic data releases and any breaking news in the meantime can also contribute to upward momentum, or depending on the nature of the information, possibly act as a speed bump slowing a trend higher.
On Monday 30-year fixed rate conventional mortgages were reported at a best execution range between 3.5% and 3.625%. FHA mortgage rates are still holding between 3.25% and 3.5%, the “comfort zone” we’ve been reporting for some time.
FHA rates tend to vary more among participating lenders than their conventional counterparts, but as of late some conventional best execution rates have dipped into FHA territory so much could depend on the individual lender.
Best execution rates aren’t available to all borrowers or from all lenders. Your FICO scores will play a large role in determining access to these mortgage loan rates.
Locking or floating is definitely a tough call to make at the moment. There seems to be more of a consensus among industry pros at the moment; locking seems to make sense in a rate environment that is still low but subject to volatility. That’s not to be construed as “lock/float advice” but just a read on the current climate. Before choosing to lock or float, it’s best to evaluate your tolerance for risk. How high will rates go before you commit to a mortgage rate lock? Knowing that is an important part of a good floating strategy.
It’s always a good idea to speak to your loan officer before choosing to float, just to get a second opinion if nothing else.
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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