Mortgage rates this morning are pretty flat -- slightly higher but there is not much movement without any pertinent economic releases.
Stocks are little changed so far and mixed. But there are small indicators that might tell us which way things will move today. Gold is up, and oil is down. Both of those occur when markets soften.
CNNMoney's Fear & Greed IndexÂ supports this as well, dropping to 64 from 65. (When investors are feeling "greedy," they tend to increase activity, which pushes stock prices higher, fuels inflation concerns, and causes interest rates to creep up.)
Note that all of these movements have been pretty small thus far, however. Analysts at the industry site Mortgage News Daily believe that investors are waiting for see if the Fed will explain its plans for the rest of the year in more detail -- specifically, the extent and timing of its planned increases.
** FHA APRs include government-mandated mortgage insurance premiums (MIP).Â
These rates are averages, and your rate could be lower.
The main release for tomorrow is the relatively-important Producer Price Index, or PPI, for February. This measures economic strength at the producer / manufacturing sector of the economy.
It's expected to show a modest increase of .1 percent, down from January's increase of .6 percent. A larger increase could push rates slightly higher, while no increase, or a drop, could cause mortgage rates to fall.
Rates have broken through their ceilings and established a new normal. While they may bump up and down at this new level, I don't see them dropping significantly in the near future.
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:
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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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)