October 21, 2016
Mortgage rate watchers were paying close attention on Thursday to see what the European Central Bank (ECB) might announce that could influence investor behavior in markets affecting mortgage interest rates. Fears of higher rates on Thursday were out to rest (for now) thanks to the ECB’s lack of movement on tapering off the European version of quantitative easing or QE. Our sources point to this as a big reason Thursday could have been another “spoiler” day for rates in the short term.
To be sure, the ECB isn’t the only thing that has the potential to affect rates, but it was the biggest thing to watch on Thursday. QE and the Fed’s handling of it was responsible for influencing many ups and downs in the U.S. a few years ago. Europe’s version of this is not directly tied into mortgage rates in the U.S.A. but investor reaction to these things can and does affect rates here. So Thursday was a miss, at least in terms of things the ECB could have done that might have put upward pressure on mortgage loan interest rates due to investor reaction.
On Thursday 30-year fixed rate conventional mortgages were still at 3.625% best execution though borrowers may have noticed the difference in rates reflected in closing costs.
There are some lenders who may offer a more aggressive best execution rate, but they aren’t as common. FHA mortgages are still within a range between 3.25% and 3.5% best execution. It may take more decisive movement from rates before we’ll see a change in the reported FHA best execution numbers.
“Best execution” refers to a situation with ideal circumstances such as an extremely well-qualified borrower. Your FICO scores and other financial qualifications will play an important part in determining your access to rates close to the ones listed here. These best execution rates are not available to all borrowers or from all lenders. Your experience may vary.
The word “lock” is still being used by industry professionals as advice for those who have not made a mortgage rate lock commitment with the lender. The recent trend has been upward, borrowers who don’t have a “risk tolerance” for rates going higher before they commit should have a conversation with their loan officer.
Deciding how high rates might climb before you finally lock in a rate is an important thing-in the current rate environment, delaying that rate lock commitment carries more risk than usual.
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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