FHA loan rates improved again last week. That’s three weeks in a row. That’s back to 2010 lows. That’s back to the levels we saw in February and March right before they jumped.
We start this week with nearly all FHA borrowers looking at sub-5% rates, no points.
If you are seeing any of the following, click the chat button, we can help:
- 5% or higher rates
- Points
- Lender costs over $1,000
The FHA loan rate has been helped, significantly, by the mess in Greece and Europe. Investors everywhere have pulled money out of the eurozone and plugged it into our markets. More foreign money = lower home mortgage rates.
That’s good. But that could end at any moment. That’s risk #1.
Risk #2 to mortgage rates this week is the economic calendar. It is loaded.
- Housing: Home Builder Housing Market Index, Building Permits, Housing Starts
- Inflation: PPI & CPI
Oh, and it is also the week of the release of the Fed minutes from the April meeting. That’s always a market mover and happens in addition to some other highly influential reports.
FHA interest rates have been here before. Never in history have they stayed here for long. If you’re undecided whether to lock or float, you stand to gain very little by waiting, but could lose .5% in the blink of an eye.
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Mortgage markets worsened last week in see-saw trading. By the time Friday’s market closed, FHA loan rates had moved higher.
The biggest stories of last week were actually non-stories.
First, the ash cloud from Iceland’s Eyjafjallajökull volcano dissipated, allowing warehouses to move inventory, airlines to move people, and businesses to move product. In addition, Greece moved closer to securing emergency funding that will help it stave off default.
When these two issues were threats earlier in the month, mortgage bonds rallied on safe haven buying, driving rates down. As the threats lessened over the course of last week, however, mortgage bonds sold off and mortgage rates rose.
By contrast, this week features lots of stories. Economic data will be at the forefront, as will the Federal Reserve which meets for one of its 8 scheduled meetings of the year.
- Monday : Greece is expected to announce an aid package
- Tuesday : Case-Shiller Index reports on home values from February
- Wednesday : Fed adjourns from its 2-day meeting
- Thursday : Initial Unemployment Claims are released
- Friday : GDP and consumer confidence numbers are released
Furthermore, Wall Street will have its eye on the Senate’s questioning of key Goldman Sachs employees in the wake of the SEC’s fraud charge.
In general, news that’s “good” for the U.S. economy will be bad for mortgage rates, and vice verse. And with mortgage rates changing as quickly as they have been, rates could really rise in a hurry.
The best defense against rising mortgage rates is to execute a rate lock. If you’re nervous about rates moving higher, call your loan officer and execute your rate lock today.
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