According to the report, average interest rates on 30-year FHA loans have dropped to 3.71 percent, which is the lowest rate reported since November of 2019. In addition, 15-year fixed FHA loan rates remain near all time lows at 3.16 percent, and 5-year adjustable rate mortgages (ARMs) at 3.33 percent have experienced a slight increase from last week's 3.30 percent.
Overall, mortgage rates have remained very low since the start of the year as the COVID-19 pandemic has weighed heavily on the economy. The latest report from the FHA demonstrates that this trend is continuing into 2021, even as the economy shows signs of recovery. Despite the increase in housing demand due to low mortgage rates, the FHA still believes that it is important to encourage more homebuyers into the market by keeping mortgage rates low.
The low rates have been beneficial to both new and existing homeowners. For instance, new homebuyers who are looking to purchase their first home with an FHA loan may benefit from the lower costs associated with these loan rates. Additionally, existing homeowners may enjoy the flexibility to refinance or take out a second mortgage to take advantage of the current low rates.
At the same time, however, the FHA warns potential borrowers about the dangers of taking on too much debt in the form of a mortgage. If a borrower takes out a loan with more debt than they can manage, they may be facing a difficult time when it comes to making payments down the road. To avoid any issues, the FHA encourages borrowers to make sure that they are able to handle the monthly payments associated with a loan before signing on the dotted line.
Overall, the FHA's latest report indicates that mortgage rates have reached 20-month lows. While this news is encouraging for potential homebuyers, it is crucial for them to exercise caution and ensure that they can manage the associated costs of the loan before entering into an agreement. With the right precautions, low mortgage rates can be beneficial for both new and existing homeowners, allowing them to enjoy the benefits of lower costs and greater flexibility.
This article was contributed on Nov 14, 2023