4.25% 30 Year Fixed Rate
Loan Amount
Loan Type

Program Rate APR
30-Yr fixed 4.750 % 0.7 to 1
15-Yr fixed 3.750 % 0.7 to 1
5/1 ARM 3.125 % 0.7 to 1
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FHA Mortgage Rates Continue Their Low Trend

FHA mortgage rates this week were largely unchanged from last week’s historical lows despite disparaging financial reports and a roller coaster of political activity which is changing the economic face of the European Union.

Good mortgage rates are set to prevail thanks to the continuing efforts by the Federal Reserve to keep long-term rates low enough to stimulate lending. FHA mortgage rates continue to trend lower than the benchmark conforming fixed-rate home loans. The annual percentage rate (APR) of the 30-year fixed rate loan guaranteed by the Federal Housing Administration stands at 3.5 percent on average, while the average APR for the 15-year fixed rate FHA mortgage is hovering around 3.0 percent. For adjustable rate mortgage (ARM) products, the APR was also 3.0 percent for the 5/1 FHA home loan.

Considering that the average APR on conventional and jumbo mortgages is pretty low, it is possible that FHA mortgage rates will probably edge up a couple of basis points in the weeks to come. While the world’s financial markets are pricing the bonds of troubled European economies such as Greece and Italy higher than ever, the Federal Reserve Bank intends to keep the yield on the U.S. Treasury bonds as low as possible. This move will continue to make U.S. sovereign debt attractive to institutional investors, thereby guaranteeing that American borrowers will enjoy pretty good mortgage rates for a while longer.

One of the biggest issues surrounding the state of the American mortgage lending industry is the annual report recently presented to Congress by the Federal Housing Administration. The FHA report contains highlights which some experts consider may point to the precarious situation presented by the agency. The FHA is in a perilous state, and it may necessitate a bailout from the U.S. government. The problem comes from the FHA’s inadequate capital reserve levels, something that has plagued the agency for the last two years. The U.S. housing market is not appreciating fast enough for the FHA to shake off its $50 billion need of capital reserves.

The problem with the FHA’s inadequate capital reserves is that the overall state of the American economy is not conducive to reducing the risk of the agency’s loan portfolio. While the unemployment rate has dipped slightly, the presence of negative equity still plagues the market. Despite the mounting problems for the FHA, mortgage experts do not think that rates will suddenly increase in the weeks to come.