An FHA loan is a mortgage that the Federal Housing Administration (FHA) insures. Usually, these types of loans are optimal for consumers with a lower credit score or a lower down payment.
The FHA insures mortgages from various origins and lenders, such as individual lenders, credit unions, and banks, protecting both lenders and borrowers.
However, mortgage rates are highly susceptible to inflation, and it appears as though FHA loans are experiencing a slow, but steady increase in rates.
Here’s everything you need to know.
High Demand, Low Inventory
High demand in the housing market essentially means that lots of consumers are currently looking to purchase homes.
Meanwhile, low inventory in business means that there currently aren’t many available products. In this case, there are a low number of houses available for buyers. This is not much of a negative when there are only a few consumers looking to purchase.
However, the decrease in available inventory is currently coupled with many buyers eager to move into a home. This has resulted in a spike in the costs associated with purchasing houses, and FHA mortgage rates have ultimately increased with them.
This rise makes it difficult for buyers to enjoy the generally available low interest rates.
Mortgage Rates Are Still Low
While FHA mortgage rates are rising, they’re not at an all-time high. In fact, they’re actually considered to be lower than usual.
In both 2018 and 2019, mortgage rates were substantially higher than they are right now in 2021. So if you’re considering buying a new home and taking out an FHA mortgage, now might be a good time to do so. Rates are going up slowly, so you may want to consider taking action now before it’s too late and you miss out on a good deal.
What Will Mortgage Rates Look Like in the Near Future?
Many experts don’t foresee drastic changes and believe that the prices of homes and FHA mortgage rates will continue to steadily increase. There is currently an incentive to keep costs high on the market, and the economy continues to experience improvements. Therefore, it is very likely that the market will stay this way for the foreseeable future
The most positive potential outcome is that, while home prices will continue to rise, the rate at which they increase may drop a bit.
Need a Mortgage?
Are you considering applying for an FHA mortgage? Let Mortgage Solutions Financial guide you through the process. We will be happy to answer any questions you may have about FHA mortgage rates or the application process in general. Contact our experts today to get started.