There are no pertinent economic releases affecting mortgage rates today. We'll take our cues from the markets. Stocks are pretty flat, and the major indexes are mixed this morning. However, ten-year Treasury yields are up two basis points (2/100ths of one percent), oil is higher and gold is lower. Those figures point to increasing heat in the economy, greater concern about inflation and rising rates.
But probably not anything huge.
CNNMoney's Fear&Greed Index edged up one point to a reading of 70 this morning. Greedier than yesterday, but not by much.
There will be a Treasury auction this afternoon, selling 3-Year Notes. Healthy demand could push bond prices higher and interest rates lower. Â If investors are unenthusiastic, however, interest rates could go higher. Results will be available after 1:00 PM EST.
** FHA APRs include government-mandated mortgage insurance premiums (MIP).Â
The main piece of news for tomorrow is ADP's National Employment Report. The payroll processing giant's releases are closely watched because many believe that they foreshadow the highly-important Monthly Employment Report from the Labor Department, due this Friday.
If the numbers come in with more jobs added than expected, mortgage rates could rise. However, if fewer-than-expected positions were added last month, mortgage rates could fall. Increasing employment is a key indicator of economic health and future rate increases.
Analysts believe that 183,000 jobs were added to ADP's processing in February, down significantly from January's 237,000.
Mortgage rates today are up sharply. If closing within 30 days, I'd lock. If I could lock for a longer period at no cost, I'd lock. And if a higher rate would price me out of a house I wanted to buy, I'd lock.
Note that this is what I would do if I had a mortgage in process today. Your own goals and tolerance for risk may differ.Â
Mortgage interest rates depend on a great deal on the expectations of investors. Good economic news tends to be bad for interest rates, because an active economy raises concerns about inflation. Inflation causes fixed-income investments like bonds to lose value, and that causes their yields (another way of saying interest rates) to increase.
For example, suppose that two years ago, you bought a $1,000 bond payingÂ five percent interest ($50) each year. (This is called its â€ścoupon rate.") Thatâ€™s a pretty good rate today, so lots of investors want to buy it from you. You sell your $1,000 bond for $1,200.
The buyer gets the same $50 a year in interest that you were getting. However, because he paid more for the bond, his interest rate is not five percent.
Your buyer gets an interest rate, or yield, of only 4.2 percent. And thatâ€™s why, when demand for bonds increases and bond prices go up, interest rates go down.
However, when the economy heats up, the potential for inflation makes bonds less appealing. With fewer people wanting to buy bonds, their prices decrease, and then interest rates go up.
Imagine that you have your $1,000 bond, but you can't sell it for $1,000, because unemployment has dropped and stock prices are soaring. You end up gettingÂ $700. The buyer gets the same $50 a year in interest, but the yield looks like this:
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)