May 16, 2016
After last week’s move into the best rates of the year (best execution), then losing ground, mortgage rates closed out the week slightly lower. That raised hopes for some that continued improvement could come in the short term. At the time of this writing, 30-year fixed rate conventional mortgage loan rates were in a best execution range between 3.5% and 3.625%.
That puts conventional rates closer to the FHA range of rates than is typically seen, though FHA mortgage loan rates do tend to vary more between participating lenders. At the time of this writing, FHA mortgage rates are in a best-execution range between 3.25% and 3.5%. FHA mortgage loan rates tend to take a bit more time to reflect gains and losses in the market as they affect mortgage loan rates. You may see that with continued improvement, FHA rates eventually “catch up” with the changes to their 30-year fixed conventional counterparts.
As always, best execution rates are not available to all borrowers or from all lenders. Your FICO scores, loan repayment history and other financial qualifications play an important role in your access to the best rates. Your experience may vary.
The locking/floating question would seem “obvious” at times like these (to some). When rates are moving lower in and around what some market watchers describe as “year long lows” or even better, what is the advantage to floating (holding off on making a mortgage rate lock commitment with the lender in hopes of lower rates)? For some it’s a short term gamble over a weekend in hopes of a bit more improvement come Monday. For others, it’s because closing day is farther away and many things can change between now and then.
Floating is never risk-free, so borrowers need to assess their situation, the state of the current mortgage rate environment, and other factors. Make the most informed decision you can before choosing to float even when conditions seem to be ideal for it. Rates can always move higher or lower based on breaking news, investor reaction to it, and other factors.
This weeks’ factors include the release of economic data such as the Consumer Price Index on due out Tuesday, and the Fed meeting minutes due to come out on Wednesday. Those things can and often do influence rates, so your short term lock/float strategy will definitely need to take such things into account.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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