VA mortgage rates can change daily, as anyone currently following VA mortgage rates with a loan in process. Whether the loan application is for a refinance to get a lower rate or switch out of an adjustable rate mortgage and into a fixed rate, if a borrower has yet to lock in an interest rate, it’s a daily affair. Borrowers contact their loan officer frequently to check on interest rates to see what they’re doing but without some major economic event, mortgage rate moves are sometimes imperceptible, if they move at all. You won’t see a 30 year fixed rate at 4.50 percent on a Monday and 6.50 percent on Tuesday for example.
Yet those who are following VA rates are most likely following the Federal Reserve to see when rates will be raised by the Fed. The Fed has been buying mortgage bonds and Treasuries at quite a clip since November of 2008 but announced a gradual end to the program that should conclude sometime this fall. The Fed is now buying $45 billion per month of mortgage bonds and Treasuries, down from $85 billion as late as last December. What happens when this program ends?
These large purchases of bonds and Treasuries has kept the price of those instruments high and rates low but as the program begins to wind down there will be fewer buyers. That will mean higher rates. So when will VA rates go up? If you just considered the end of the current quantitative easing program by the Fed, then you might expect VA rates to go up later in the fall. But the economy may still be in a rather modest recovery and until the Fed is convinced that the economy is in fact on the mend, it’s very possible that mortgage rates will still be near current levels. If on the other hand the economy is on the right track, mortgage rates will be higher later this year. If you’re in a position to lock in a VA rate, the prudent move will be to take advantage of rates today.