Interest Rates Trending Slightly Lower PDF Print E-mail
Tuesday, 25 February 2014 00:00

This year began with the headlines reading interest rates were on the rise, and by mid-January the 10-year treasury note had broken above 3.00% on the news that the Federal Reserve's tapering program was in full swing.  However, in the weeks since then, rates have slowly started to float down once again, hovering most recently in a range between 2.70% and 2.80% on the 10-year.  As this is the particular instrument most closely associated with mortgage rates, we've since seen the rates on 30-yr conventional/conforming fixed mortgages come back down as well - from around 4.75% earlier in the year to around ~4.25% now.  And although this number is certainly off the lows of last year, when buyers were enjoying mortgage rates in the mid-3's, it's a nice change of direction in the short term and improves the relative purchasing power of buyers as they begin to step into the 2014 market; a half percentage drop in interest rates in a months time is fairly positive, and would have been big news in years gone by.

The rates on FHA and VA loans will tend to be even better than those on conventional loans at the moment, with many FHA programs offering closing credits to the buyer in addition to a lower rate by default.  Combined with the 3.5% minimum down payment requirement, an FHA loan might seem attractive in this context.  Keep in mind though that with the significant increase in mortgage insurance premiums built into the FHA program as of last year, the cost on a monthly basis will probably not be worth it if you could otherwise afford to go conventional.  With the recovery of the area housing market, many lenders are now comfortable issuing conventional loans to purchasers with solid credit for a relatively low 5% down payment requirement, and some local portfolio lenders are willing to take it even lower.

VA loans are always a great route to go provided there aren't property-specific barriers involved (such as certain condo communities), but of course these are only available to the veterans that have served in our armed forces.

Last Updated on Wednesday, 26 February 2014 16:55

Coldwell Banker Residential Brokerage
4500 Old Dominion Dr, Arlington VA 22207
Phone: (703) 524-2100 Fax: (703) 524-9014