FHA interest rates have been under pretty heavy selling pressure for the past month. What this has done is drive the benchmark 30 year fixed rate up to about 5% today.
What we’re looking at is the graph of the Fannie Mae 4.5% bond, but the Ginnie Mae’s that drive the FHA loan rate have followed the same path. This is the price of the bond, the rate moves in the opposite direction. So, in this graph, red is bad for mortgage rates and green is good.
It’s very clear that this month has been dominated by bad movement in terms of mortgage rates.
The 2010 FHA mortgage rate predictions point towards a continued trend towards higher rates. I’ve seen argument for rates ranging from 5.5% to 6.5%. The case being made for the 6.5% folks is technically sound reasoning, but I think it presses the edge of the high side. Similarly, that 5.5% guess is probably low. These estimates foreast the FHA interest rate rising anywhere from .5% to 1.5%. It is probably safe to split the difference and become prepared for a 6% rate environment and about a 1% increase from today’s levels.
What does that mean for a home buyer? Get moving and get moving quickly. The home supply is rapidly selling off. That, more than any other single factor, influences home prices.
They’re not getting cheaper. If home prices are going to be the same or higher and mortgage rates are going to be higher, possibly much higher, the housing payment for the exact same home could be 10% higher by March.