June 6, 2015
Mortgage loan interest rates have been trending higher as of late, partially due to overseas economic headlines such as the Quantitative Easing situation with the European Central Bank, but also because of local economic data–case in point, the much-anticipated jobs report that came out on Friday.
The Employment Situation Report showed positive data, which can and often does have a negative effect on mortgage loan interest rates. This may seem like a contradiction in the eyes of those not used to watching the markets, but a good thing to keep in mind about mortgage loan interest rates is that when there is bad economic news, mortgage loan rates can and often do improve. When there is positive news the opposite can and often does apply.
Investor reaction to Friday’s economic data resulted in mortgage loan rates in general moving higher–30 year fixed rate conventional mortgage loans moved into a range of best execution rates between 4.125% and 4.25%. That puts rates solidly–at least for now–back in the 4% zone after a long trend of sub-four percent activity.
FHA mortgage loan rates are still at their best execution comfort zone of 3.75% but if the upward trend continues don’t expect that number to persist. It’s likely the next change will be into a range of rates and it’s possible to see FHA mortgage loan rates hit the four percent zone unless there’s a move away from the upward momentum we’re currently seeing. Time will tell; there are no guarantees but using past activity as a general guide we may see FHA loan interest rates approach 4% best execution.
When we use the term “best execution” we refer to a situation with ideal circumstances including a highly qualified borrower with outstanding FICO scores, etc. Your access to these rates depends on your FICO scores, loan repayment history, etc. Your experience may vary from lender to lender.
Do you have questions about FHA home loans? Ask us in the comments section.
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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