FHA loans are not only getting easier to be approved for, but they are now closing with ultra-low rates.
On average, FHA loans closed with a mortgage rate of 3.98% in the month of June. This is the first time rates have been below four percent since May of 2015.
FHA loans are known for having lower rates than other mortgage types. Already-low rates available across the nation means that current FHA rates are even lower than they have been.
Rates were dropping fairly consistently during June which led to the low average rates. Mortgage rates also dropped during the first few weeks in July and they’ve remained low since then. It would not be a surprise if mortgage rates for FHA loans are currently lower than they were for the month of June.
The housing market has been one of the strongest parts of the US economy in 2016 and it doesn’t show signs of slowing down. Low mortgage rates have been helping homes sell at a healthy pace while making home buying more easily affordable.
While June showed steady growth, July could be a better month for potential home buyers. Overall, this summer is an ideal time for those looking to purchase a home.
Strong Housing Market Fueling Growth
Every month, mortgage software company Ellie Mae releases their Origination Insight Report. The report is meant to reveal the average data for mortgages that went through their software during the previous month.
Because many lenders use Ellie Mae’s software, their data is useful for gauging the mortgage industry.
According to Ellie Mae, the month of June continued a streak of impressive strength in the housing market. Not only were rates low, but a high percentage of mortgage applications closed. Mortgages also closed at a fast clip with the average mortgage closing within 46 days.
The low rates, quick closing times and the high percentage of closed mortgages are all signs of steady strength and growth in the housing market.
The housing market remained strong in June despite upsets in the economy. The Brexit was a leading cause for economic distress toward the end of the month, but housing was largely unaffected. The only major change to the market was a large drop in mortgage rates.
The low rates and steady growth reported by Ellie Mae show that the housing market had a successful month while other markets struggled. This is a positive sign for potential home buyers and it should give them confidence in their decision to lock in on low rates.
Mortgage Rates Neared Lows in June
FHA loans weren’t the only mortgage type that offered low rates in the month of June.
Conventional loans averaged a rate of 4.12%, nearly 10 basis points lower than rates in June of last year. Over 75 percent of conventional purchase loans closed in the month of June meaning that about ¾ of all conventional mortgage applicants were approved for a mortgage within a 90-day period.
VA loans benefitted from the lowest total rates. In June, rates on VA loans were 3.84%, about the same they were one year ago. Those eligible for VA loans can get some of the lowest rates available.
Overall, the average rate for closed mortgages was 4.04% in the month of June. By comparison, rates averaged over 4.1% in June of 2015.
This statistic becomes even more impressive when the number of closed loans is taken into consideration. In June, nearly 70 percent of all loans closed. In June of 2015, less than 65 percent of mortgage applications closed.
Over the course of one year, mortgages have not only become more affordable, but they have also become easier to get.
For home buyers, this is important to take note of. If any signs were needed that the housing market is strong, this should show some comfort. Lenders are becoming more confident in those looking for mortgages, and home buyers are getting rewarded with low rates and a higher chance of getting their mortgage closed.
Mortgage rates change every day, and Ellie Mae’s data is only a collection of mortgage information from the month of June.
Rates today are likely lower than rates reported by Ellie Mae. Mortgage rates have been dropping throughout July, and they currently rest near three-year lows.