April 5, 2020

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Low Home Loan Interest Rates: How Long Will They Last?

Low Home Loan Interest Rates: How Long Will They Last?

Mortgage loan interest rates and the coronavirus–how low can they go?

COVID-19 and coronavirus headlines have, via investor reaction to the headlines and the situation in general, greatly affected mortgage loan interest rates, pushing them to lows not seen in quite some time.

Investors are putting more funds in safer investments, which can serve to put downward pressure on mortgage loan interest rates.

The rates have fallen to incredible lows in 2020; not many expected rates to fall THIS low and some homeowners are scrambling to refinance and take advantage of lower rates and less costly monthly payments.

Some borrowers might feel as if maybe they owe it to themselves to try to buy or refinance with mortgage rates as low as they are now; 3.25% for FHA and VA mortgages, best execution, at the time of this writing.

But trying to apply for a mortgage before you are truly ready is a bad idea. The low rates you see now won’t mean a thing unless you actually get approved for a loan and can negotiate an interest rate lock commitment with your participating FHA lender.

There is an added consideration; the low rates we read about now not only cannot last forever, but there WILL be a reversal or a market correction in the rates that will pull them back to higher levels.

This is not uncommon, it’s not an emergency, it’s just the way the market operates. When a situation puts downward pressure on mortgage rates, that pressure will be released at some point, and rates will snap back to higher levels. That’s due in part to investors choosing to stop playing it safe when conditions seem right.

When? It’s anybody’s guess, and that’s one reason why lenders advise borrowers at the time of this writing to enjoy these low rates while they last. Because they are going away once the coronavirus issue starts moving into the background in favor of other world issues.

No matter what interest rates might be displayed, the most important thing is to get approved for the loan. Mortgage loan rates or refinance loan interest rates are a factor you can worry about after your application is approved.

The coming market correction is real; those who are ready to make a mortgage rate lock commitment with the lender can take full advantage of the current lower rates but FICO scores and credit history play an important role in determining what rate you are offered.

The interest rates you see online before you fill out paperwork? Those aren’t set in stone and your experience will vary based on your financial qualifications.

If you need help understanding the home loan process, some expert advice may be just what you need; contact the FHA directly at 1-800 CALL FHA for a referral to a HUD-approved housing counselor.

Joe Wallace - Staff Writer

By Joe Wallace

February 27, 2020

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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