November 11, 2016
Mortgage loan interest rates are not tied to election results. However, investor reaction to major events that have economic implications-and the 2016 Presidential election is definitely one of those-can and often does result in changes in mortgage loan rates.
We won’t speculate or editorialize on the outcome of the 2016 election, that’s beyond the scope of this report. However, in the wake of election night, we have seen markets react sharply to both the results and the aftermath. On election night alone, the Dow fell dramatically after hours, with recovery the next day. This is a common knee-jerk reaction in the marketplace under such circumstances.
What’s important for borrowers to know? At the moment we are in an upward trend for mortgage loan interest rates. Investor reaction to the election has created conditions that pushed 30-year fixed rate mortgage loan interest rate numbers higher than we’ve seen them go in some time. On Thursday were in a best execution range between 3.75% and 3.85%. Rates could begin flirting with the low four percent range soon IF the upward trend persists in the way it has been performing since Tuesday.
FHA mortgage loan interest rates are in a new best execution range between 3.5% at the bottom end and 3.75% at the upper end of the range. As always, the numbers you see reported here assume ideal conditions. “Best execution” means an ideal borrower with outstanding FICO scores and other financial qualifications. The rates listed here are not available from all lenders or to all borrowers. Your experience may vary.
In the current rate environment, the general wisdom is that “floating”, or holding off on making a mortgage loan interest rate lock commitment with your loan officer, is a high-risk thing to do. No one among our sources seems to be willing to advise floating at the moment as there’s no telling how long the current rate trend will persist over the short term.
Markets will eventually calm down after the reaction to Tuesday, but as mentioned above, the timetable for that is unknown. If you aren’t sure what to do about your mortgage rate lock situation, the best thing you can do is talk to your loan officer about current conditions and get some sound advice. Part of the reason for the volatility at present is that investors don’t know what the implications of Tuesday’s election results are for the economy as a whole. Markets hate uncertainty, and we have plenty of it in the short term.
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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