October 25, 2016
We’ve watched an overall upward trend in interest rate behavior for mortgages in recent weeks, and while there have been some days of recovery, it seems that at present there are a variety of factors putting upward pressure on rates.
Market watchers have been using the phrase “the trend is not your friend” for a while now, and Monday’s rate movement showed no signs of proving that phrase wrong in the short term.
Rates moved higher on Monday, not enough to push actual numbers up, but enough so that affected borrowers may notice a difference in closing costs. 30-year fixed rate conventional mortgages are still being reported at or near 3.625% (best execution), and the FHA mortgage loan interest rate range between 3.25% and 3.5% is still there (again, best execution).
It may take several days of sustained upward movement or one day of dramatic change to push the current FHA rates into new territory, but FHA rates do tend to vary more among participating lenders, so you may need to look at several financial institutions to see where the most competitive rates are.
As always, the numbers you see reported here are “best execution” rates, which assume ideal conditions. Your FICO scores, loan repayment history and other financial qualifiers will play a big role in determining your access to rates like these. They are not available to all borrowers or from all lenders and your experience may vary.
The key to locking or floating at the time of this writing is “risk tolerance”. If you have not yet entered into a mortgage loan interest rate lock commitment with your lender, knowing how high rates will climb before you decide to commit is an important thing. Those who float, hoping for rates to move lower, do so with a degree of risk no matter what market conditions are like, but in the current rate environment that risk may be elevated.
It’s best to get the advice of your lender on short-term interest rate trends if you haven’t committed and are within 90 days or less of closing. Those who are farther out may feel more comfortable floating for the time being, but that conversation with your loan officer can only help you make up your mind on the timing of your rate lock commitment.
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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