March 21, 2017
Since our last report, the Fed hiked interest rates. That comes as no surprise as it was widely expected to happen, and mortgage loan rates began rising ahead of that announcement as the industry began to anticipate the move. Once the Fed announcement happened, many sources point out that when rates began to fall again, it was due in part to adjustments following that anticipation.
There is no single reason why mortgage loan interest rates rise and fall-any number of factors may combine to influence investors in the markets that directly affect these rates. But in the short term, single causes can and often do exert greater influences. Now that the Fed announcement has come and gone, what’s the state of mortgage rates in the short term?
In general, they are moving lower. Some of our sources believe that confusion over economic policy (or a basic level of simply not knowing what’s going to happen) is at least partly to blame. And while we could analyze these factors at length (proposed tax changes, healthcare bill issues, etc.) the bottom line for the average borrower is that mortgage rates are, for now, moving lower after a period of consistent upward momentum.
30-year fixed rate conventional mortgages are, best execution, in a range between 4.125% and 4.375% depending on the lender and other factors. FHA mortgage rates are holding in a best execution range between 4.0% and 4.25%. FHA rates tend to vary more among participating lenders, so it’s a good thing to shop around for the most competitive interest rates.
Floating, or holding off on a mortgage rate lock commitment with your lender, is less risky at present according to some industry professionals. Rates seem to be moving up and down within the confines of the 4.0 to 4.5% range at the moment, (some days the changes are reflected in closing costs rather than actual interest rate numbers) but there is always the potential for things to change more sharply depending on factors like breaking news, economic data releases, etc.
Brexit is back in the headlines and that is one thing that has definitely altered rates in the past-depending on the news on that issue, investors may or may not change their behavior to go into safer options, which can definitely affect mortgage rates in the short term. The Brexit issue should not be underestimated in terms of its potential to affect your lock/float decisions. That international issue could easily contribute toward upward pressure on rates over the short term.
If you are unsure whether to lock or float, have a conversation with your loan officer and make the most informed choice you can. In the current rate environment, floating still carries a bit of elevated risk, so learn what those risks are before committing.
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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