November 16, 2016
Since the election, mortgage rates have been on the move, and this week has seen a sharp increase in rates that we haven’t experienced in some time. In fact, rates are the highest they’ve been all year. It’s unclear at this point whether this is a short term reaction to current events, or if this indicates a longer-term trend.
30-year fixed rate conventional mortgages did something they haven’t done in a very long time-they broke into the four percent range, with a best execution 4.0% for the most well-qualified borrowers. Rates have flirted with the bottom end of the four percent range in the recent past, but managed to stay below four percent for a very respectable length of time.
FHA mortgage loan interest rates are now at a best-execution 3.75%, the highest number we have reported for FHA rates in many months.
Best execution rates assume ideal conditions including a well-qualified borrower with outstanding FICO scores, loan repayment history, etc. The rates reported here are not available to all borrowers or from all lenders. Your experience may vary.
Overall, our sources discourage floating, or holding off on a mortgage loan interest rate lock commitment with the lender. It is hoped that rates will recover to their previous sub-four percent ranges, but there’s no way to tell how investor behavior over the current political climate will turn. Presidential races and their aftermaths are not tied directly to mortgage loan interest rates, but investor behavior can and does affect rates.
And investors don’t like uncertainty or chaos.
So the lock/float question is one of risk tolerance, but even those with a high amount of patience and time are likely to find rates too volatile to deal with in the short term. “Lock” seems to be a word very popular right now with industry professionals. Any borrower who isn’t sure how to proceed with mortgage rate lock/float concerns should have a conversation with the lender as soon as possible.
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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