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Posted 05/11/2017

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Mortgage Rates Today, May 11, 2017, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Rates Today?

The most important piece of information we're getting today is the Producers Price Index (PPI). This report tracks inflationary pressures at the manufacturing level. If manufacturing costs rise, retail costs tend to go up as well, making inflation a concern.

Analysts had expected a .2 percent increase; what they got was a whopping .5 percent. That'snot good for mortgage rates.

Weekly Jobless Claims, which get released every Thursday, also proved bad news for rates. We got 236,000, instead of the expected 245,000. That's nice for the economy, less nice for rates. Fortunately, it's only a weekly report, and less important.

Other indicators are a mixed bag - the ten-year Treasury yield is down to 2.40 percent (still on the high side), oil is up (bad), gold is up (good), and all three major stock indexes are down (good).

CNNMoney's Fear & Greed Index has risen by 5 points, solidly into "greed' range at 60. That's something to keep an eye on, and not good for interest rates. If investors are in a greedy mood, they tend to shun bonds and move into stocks, causing interest rates to increase.

Click to see today's rates (Jul 24th, 2017)

Mortgage Rates Today

(As of 11:30 PDT)

Program Rate APR* Change
Conventional 30 yr Fixed 4.000 4.000 +3.23%
Conventional 15 yr Fixed 3.250 3.250 Unchanged
Conventional 5 yr ARM 3.125 3.723 Unchanged
30 year fixed FHA 3.500 4.450 +2.51%
15 year fixed FHA 2.875 3.779 +0.51%
5 year ARM FHA 3.125 4.018 +0.68%
30 year fixed VA 3.750 3.873 +5.73%
15 year fixed VA 3.125 3.429 +3.69%

Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.

This Week

Tomorrow is a big day for mortgage rates:

  • Friday: Retail Sales -- This tracks consumer spending, so it's important information. Analysts expect a 0.6 percent increase in sales from March to April. More would be bad for rates; a smaller increase would be good.
  • Friday: Consumer Price Index (CPI) -- Probably the most important report this week, the CPI measures inflation potential at the consumer sector. Exerts anticipate a 0.2 percent increase in the overall index and a 0.2 percent rise in the core data reading. More is bad for rates,; less is good.
  • Friday: University of Michigan's Index of Consumer Sentiment measures consumer confidence and willingness to spend. It is expected to come in at 96.5 (from April's 97.0). A bigger drop would be good for rates.

Rate Lock Recommendation

Until Friday, this is a pretty light week, data-wise. if I have a rate I like, I'd be tempted to set it and forget it. But if you want to gamble on Friday's releases, you may do better. I'd look at Wednesday and Thursday Treasury auction results and see how prices went before deciding. Good auctions mean lower rates; bad auctions (no demand) mean higher rates.

rate lock recommendation

What Causes Rates To Rise And Fall?

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 paying five percent interest ($50) each year. (This is called its “coupon rate.") That’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.

When Rates Fall

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 interest rate: $50 annual interest / $1,000 = 5.0%
  • Your buyer’s interest rate: $50 annual interest / $1,200 = 4.2%

The buyer gets an interest rate, or yield, of only 4.2 percent. And that’s why, when demand for bonds increases and bond prices go up, interest rates go down.

When Rates Rise

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 getting $700. The buyer gets the same $50 a year in interest, but the yield looks like this:

  • $50 annual interest / $700 = 7.1% The buyer’s interest rate is now slightly more than seven percent.

Click to see today's rates (Jul 24th, 2017)

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)