VA Loan Rate Trends
Anyone who has used a VA loan knows that they usually have the lowest rates available. This is made possible by the VA guarantee, meaning the VA backs the mortgage to ensure lower mortgage rates while not requiring any type of downpayment.
But VA rates are still a type of mortgage rate. This means that they increase and decrease over time.
Also, VA rates and mortgage rates tend to follow similar trends. This is because VA rates are supposed to stay competitive with conventional rates. If conventional rates increase, so much VA rates – and vice versa.
A lot has happened with mortgage rates over the past year, and we can use that information to try and predict what will happen to mortgage rates in the near future. All this information can be used to try and time when you lock-in on low mortgage rates.
What’s happened in 2018
Mortgage rates have jumped across the board to start the year. The average rate for all closed loans in December of 2017 was 4.28%, according to mortgage giant Ellie Mae’s Origination Insight Report.
By comparison, the average rate for all closed loans in March of this year was 4.69%, a jump of nearly half a percent in just a four-month span.
Of course, VA rates have been lower than this average, but the same thing holds true. The average VA rate at the end of the year was 4.05%, and in March it was 4.50%. It was a steeper increase than the overall average even though more current rates are still well below.
So, what increased mortgage rates? In a large part, rates increased because the economy is growing. Both January and February were huge months for job and wage growth, something that has long been a concern. On top of that, inflation rates have moved closer to the two-percent level that the Federal Reserve wants.
Basically, rates have been going up because the economy has been strong.
Today’s VA rates
With mortgage rates going up, what does that mean for today’s VA rates? Well, the good news is that VA rates (and mortgage rates in general) haven’t increased much over the past month.
Also, there have been a number of pieces of news, such as potential trade disputes, that might affect the economy. In anticipation, rates stopped moving as much.
The thing about mortgage rates is that they never stop moving. While rates could go up today, they could just as easily go down tomorrow. Rates could even start the day higher than they end up because they can move quickly.
It’s also worth noting that different lenders offer different rates, and rates are also dependent on other factors like FICO scores. While the average rate for VA loans last month was 4.50%, plenty of home buyers got an even lower rate.
The best method for determining the rates available to you is to get connected with lenders. These are the people that will actually give you the mortgage rate on your VA loan.
Where will rates go from here?
The big question on everyone’s mind is where mortgage rates will go from here. The short answer is that nobody knows.
If trends tell us anything, it’s that mortgage rates are lowest during the summer and into the fall. We saw this last year when rates started dropping in April and didn’t start picking back up until October. The same thing happened in 2016.
While this could happen again, nobody should assume that rates are going to trend downward. Mortgage rates have been getting higher and higher over the past four years, so there might not be much stopping them from moving even higher throughout 2018.
The best move for VA home buyers is to lock-in on rates when you’re comfortable and ready to buy a home. Low rates are great, but in today’s competitive housing market, getting the perfect home is even better. Besides, with a VA loan, home buyers will have access to lower rates than with any other type of loan, making the entire process more affordable.