FHA Streamline Refinancing Rates
Interest rates are an important component for mortgage affordability. If rates are lower, the total cost of your mortgage will be much more affordable. With lower rates, you could potentially purchase a larger home; for the sake of refinancing, lower rates mean you can own the same home at a lower total cost.
Currently, the interest rate for an FHA loan is 4.5%. (As of Oct. 12, 2018.) Most indicators suggest that interest rates will steadily climb upward as the economy continues to see growth. Interest rate standards are essentially set by the Federal Reserve, which dictates the Federal Fund Rate. This is the rate used by banks to lend money to each other. This does not automatically determine interest rates, but it’s highly influential. Rates are raised for many reasons, including the goals of combating inflation and keeping the economy from growing too much too quickly, which are both seen as harmful to the long-term economy.
There are other factors that play into the FHA’s mortgage rates. The FHA could lower their mortgage insurance rates if HUD officials determine it would help the FHA’s financial strength.
Rates will change on a regular basis. There are many sources you can use to find current rates, but bankrate.com offers reliable information on rates for FHA loans, which are the same rates used on FHA Streamline Refinancing. It should also be noted that FHA loans are offered in both fixed-rate and adjustable-rate options.
What are the Interest Rate Trends for FHA Streamline Refinancing?
With the economy showing progressive upward trends, interest rates have been increased by the Federal Reserve. Increasing these interest rates is seen as a way to steady the growth; too much growth is seen by many as a threat to the stability of the economy and could lead to economic crashes.
In December of 2017, the Federal Reserve increased interest rates for the third time that year, which demonstrated strong confidence in the market. According to MarketWatch, officials in the Federal Reserve, now headed by Jerome Powell, believe interest rates will need to be increased as long as the economy continues to soar.
BankRate says that the current rates for refinancing are mixed. For 30-year fixed rates, they found an average of 4.75%, which they say is the same as the previous week, but higher than the 4.6% average they saw the previous month. For 15-year mortgages, the average rate was 4.1%, which is up 8 points over the previous week. It should be noted that these averages are for all mortgages, not just FHA loans. BankRate’s Rate Trend Index shows some interesting numbers. According to 64% of their panel, rates will remain unchanged for the week, while the remaining panel members are split evenly on whether it will go up or down.
There are a lot of complex numbers that can be thrown around, but the bottom line is that according to numbers, the economy is expected to rise and, because of this, interest rates will need to be increased. There may be monthly decreases in overall rates, but the general trend is upward. This means that if you are considering refinancing, all signs show that doing so sooner rather than later would be beneficial.
Are People Refinancing?
While interest rates have steadily increased, it appears that more homeowners are refinancing their loans to get better terms. According to the August 2018 Refinancing Report, which was published in October by the Federal Housing Finance Agency, total volume of refinancing increased because mortgage rates dropped in July, from 4.55 in June to 4.53% the next month. As mortgage rates rise, however, you’ll likely see a decrease in the total amount of refinancing. But even when interest rates are higher refinancing through the FHA Streamline Refinancing program may be beneficial.