This morning, stock markets are mixed but flat, and yields for ten-year Treasuries are down by .2 percent. CNNMoney's Fear & Greed Index has fallen back from a neutral 53 to an even more neutral 51. These signs are all good for mortgage rates today.
We also have a couple of reports.
Experts predicted this reading would be 97. Â It came in at 97.8.Â That's higher, which could be negative for mortgage rates. However, it's a preliminary reading, and may not have too much impact.
Consumer Sentiment is important for mortgage rates because two-thirds of our economy is driven by consumer spending, and we spend more when they feel upbeat about economic prospects.
Industrial production was expected to fall by 0.3 percent in February. Instead, we got a sixth straight month of manufacturing increases, according to the Federal Reserve. US buyers are shopping for cars at levels approaching all-time highs, and exports are strong as well.
This is great for the economy but does indicate heat. Increasing economic activity does tend to fuel concern about inflation, and push interest rates higher.
** FHA APRs include government-mandated mortgage insurance premiums (MIP).Â
These rates are averages, and your rate could be lower.
Next Monday, like most Mondays, has no pertinent economic reporting scheduled. Mortgage rates will largely be driven by global economic news, stock market activity and random tweets from the White House.
This is a good time to take advantage of the drop in pricing. I recommend locking for anyone closing n the next 60 days.
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)