With today's mortgage rates at¬†3.5 percent, on average, nationwide, loan terms are likable and lockable.
However, with the Federal Reserve hosting its sixth¬†scheduled meeting of the year this week, this week's ultra-low rates could start to trek higher.
Now, Wall Street is¬†nearly¬†certain that the Fed won't raise its benchmark Fed Funds Rate from its target range near 0.25%. But, it's not what the¬†Fed does that's always so important -- sometimes, it's what the Fed says.
In¬†December 2015, after the first increase to rates in a decade, the group promised three more increases to the Fed Funds Rate over the next twelve months. That statement sent mortgage rates skyward.
Since that declaration, the economy has shown signs of a slowdown, the global economy has sagged, and equity markets have struggled, wiping out billions of dollars of wealth. The Fed has backtracked on its forecast.
And, mortgage rates have dropped on the turn-about.
Conventional 30-year mortgage rates are down more than 50 basis points (0.50%) from the New Year and are below their year-ago levels by a lot. This is unexpected.
FHA mortgage rates and VA mortgage rates are extra-low, too.
The sudden drop has millions of U.S. homeowners in the money to refinance,¬†and home buyers are finding that their purchasing power has increased.
For buyers using the¬†HomeReady‚ĄĘ mortgage program¬†and other low-down payment loans,¬†buying a home has become less expensive.
Thinking of buying a home or refinancing one? This week may be a good week to get started.Click to see today's rates (Oct 28th, 2016)
According to Freddie Mac, the average 30-year conventional fixed-rate mortgage rate climbed 6 basis points (0.06%) last week, and now averages 3.50% nationwide.
Rates are quoted with an accompany 0.5 discount points¬†to be¬†paid at closing.
Only once¬†in the survey's 45-year history has the¬†30-year mortgage rate held this low for this long.
That said, not everyone will get access to Freddie Mac's published rates. The weekly Freddie Mac survey comes with¬†three big caveats.
First, the survey is meant for "prime borrowers" only.
A prime borrower is one who is able to verify income, who can show credit scores of 740 or higher, and who has a downpayment of twenty percent or more for a purchase.
Second, the Freddie Mac survey reports¬†average¬†mortgage rates.
Because Freddie Mac reports average rates, some mortgage applicants will get quotes which are¬†higher¬†than the reported weekly average; and, others will get rates¬†below¬†the reported weekly average.
Rates vary by state and region, and from bank-to-bank.
This is the most important reason to shop with multiple banks before making a mortgage rate decision -- you want to make sure you're getting a fair price.
And, third,¬†you may not get a "Freddie Mac rate" from your bank because you're not applying for a "Freddie Mac mortgage".
Freddie Mac mortgages are commonly known as "conventional mortgages", and they're different from other loan types include FHA loans and VA loans, which are backed by the Federal Housing Administration and the Department of Veterans Affairs, respectively.
Like conventional loans, though, mortgage rates for FHA and VA products eased higher¬†last week, too.Click to see today's rates (Oct 28th, 2016)
This week, the U.S. economic calendar is stuffed with¬†data releases which affect¬†mortgage-backed securities¬†which, in turn, U.S. mortgage rates.
However, the week's biggest¬†event will not be data-related. It will be Fed-related.
Tuesday, the¬†Federal Open Market Committee began its¬†scheduled, 2-day meeting -- its sixth¬†of the year.
Any time that the Federal Reserve gets together, it has the power to move markets. This week's meeting, in particular, though, may make an outsized impact.
Between¬†December 2008 and December 2015, the Federal Reserve held its benchmark Fed Funds Rate in a target range near zero percent in an effort to stimulate the economy.
Then, at the end of last year, the group raised the target range to 0.25%. The move was widely-anticipated and, although it's an increase, 0.25 percent is about as low as the Fed Funds Rate can be.
When the Fed Funds Rate is low, the theory goes, business and consumer¬†borrowing costs are low, too, which boosts spending and expands the broader economy.
The Fed Funds Rate is also linked to Prime Rate, which is the rate on¬†which consumer credit cards and home equity lines of credit are based.
For the last decade, such rates have been their lowest in history. Now, they're a bit higher.
The Federal Reserve doesn't change mortgage rates, but it can¬†influence¬†them.¬†What the Fed says at its meeting, and what it does (or does not) do, sends signals to Wall Street which, in turn, affects the direction of consumer mortgage rates.
This is why the September¬†2016¬†FOMC meeting matters.¬†Cautious rate shoppers should consider locking rates before the meeting adjourns at 2:00 PM ET.
Wall Street will dissect the group's post-meeting press release for clues about future Fed activity, which will affect the direction of mortgage rates.
In general, comments about low rates of inflation should be good for mortgage rates; as should an indication that the Federal Reserve will continue to invest in mortgage-backed securities.
Mortgage rates may rise if the Fed raises the Fed Funds Rate or hints at future increases.
Mortgage rates look excellent -- for now. If you've been waiting to purchase a home or refinance one, consider moving up your time frame. Rates can change suddenly¬†and without notice.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Oct 28th, 2016)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2016 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)