30-Year FHA Mortgage Rates Climb, But Still Historically Low

FHA mortgage rates rose a bit this week, according to the latest survey conducted by Freddie Mac. But they’re still hovering at historic lows, well below the 4% mark. Borrowers with excellent credit are currently locking in 30-year rates as low as 3.55%. Here’s an update on FHA mortgage rates past and present, and with an eye to the future.

30-Year FHA Mortgage Rates Averaged 3.69% This Week

The average rate for a 30-year fixed mortgage fell to 3.69% this week, according to the long-running industry survey conducted by Freddie Mac. This average applies to both FHA and conventional home loans within the 30-year category.

The current rate averages in the 15-year fixed and the 5-year ARM categories are hovering just below 3%, and have been in that range for several weeks now.

So how do these current rate averages compared to last month, and to this time last year? Here’s a retrospective comparison:

Still Lower Than Last Month, and Last Year

FHA mortgage rates have come down a bit since the beginning of 2015, and they are significantly lower today than this time last year. This is the exact opposite of what Freddie Mac’s economists were predicting to happen last year at this time.

In December 2014, Freddie Mac’s chief economist Frank Nothaft published an article entitled “A Look Back at Five Predictions for 2014.” In it, he said the following:

“As we entered 2014, mortgage rates [in all loan categories] had been inching higher and were expected to continue gradually rising throughout 2014. What happened? Quite the opposite happened.”

Opposite indeed. Conventional and FHA mortgage rates actually dropped more or less consistently over the last 12 months. Sure, there were some isolated upticks here and there. But the overall trend was downward.

Consider the evidence. We started 2014 with the 30-year average loan rate at 4.53%. By the end of last year, the 30-year average had fallen to 3.87% — a drop of 66 basis points. Now, just a month and a half into 2015, FHA mortgage rates are even lower at 3.69% for a 30-year home loan.

A picture is worth a thousand words. Here’s a 12-month rate chart from the latest Freddie Mac survey that pretty much says it all.

Rate chart, Feb 2015

This one-year chart starts at February 13, 2014 on the far left, and it goes to February 12, 2015 on the far right. You can see how rates fell pretty steadily over the last year or so.

The small upward blip on the far right is where we are right now. It shows what happened over the last ten days or so. From the week ending on February 6, 2014 to the week that just ended, the average rate for a 30-year mortgage (FHA or conventional) rose by 10 basis points, or 0.10%.

So here we are at the start of the year, and housing economists are once more making predictions related to long-term mortgage rates. And it’s basically déjà vu. Most analysts today are predicting a gradual rise in long-term interest rates between now and the end of the year.

Of course, they’ve been wrong before. So don’t bank on it.