May 11, 2016
Mortgage loan interest rates have improved this week, hitting new lows that put conventional mortgages into a new range of rates (best execution) that are now, on paper at least, overlapping the current best execution FHA mortgage rate range.
This development has encouraged some industry professionals to begin speculating as to whether the new lows are the “floor” of the improvements or whether new lows could be reached (however short-term they may be). Time will tell whether that speculation has any merit, but rates could easily be pushed in the opposite direction depending on circumstances.
30-year fixed rate conventional mortgages are at the time of this writing in a best-execution range between 3.5% and 3.625%. That range is close to the FHA mortgage loan best execution range, which at the time of this writing is between 3.25% and 3.5%. As always, best execution rates are not available to all borrowers or from all lenders. FHA rates tend to take longer to change compared to their conventional counterparts. Could we see a new low for FHA rate soon approaching the very bottom of the three percent range? Again, time will tell.
Your access to these rates is greatly determined by a variety of factors including your financial qualifications such as FICO scores and loan repayment history. Your experience may vary.
What is the going advice about locking or floating? Many are advising borrowers to make an interest rate lock commitment with the lender in cases where loans are due to close soon. If you are within 60 days of closing and aren’t sure whether to lock or to float and hold off making a mortgage rate commitment in hopes of rates moving even lower, have a conversation with your loan officer to get some advice first.
Floating is never risk free. Some could argue that holding out in hopes that a new set of mortgage loan interest rate lows are achieved may be rewarded for that optimism, but it’s equally possible that breaking news, financial data or some other factor that affects investor behavior could push rates higher once more.
With the current numbers being described by some market watchers as being at “three year lows” locking could be the best move for those looking to play it safe in a rate environment that is currently more favorable to the borrower in the short term. How long these conditions last is uncertain, and they could easily change today, tomorrow, etc.
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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