Today's only news is the weekly unemployment report. The Labor Department reported that 232,000 new claims for unemployment benefits were filed last week. That's 8,000 fewer than expected, which means the employment market may be better than previously thought.
This is not good for mortgage rates, but because this is only a weekly report, it's not considered terribly important. To get a better idea of where mortgage rates might be headed, you'll want to consider the additional data posted under the rates section.Click to see today's rates (Jul 21st, 2017)
|Conventional 30 yr Fixed||3.750||3.750||-0.13%|
|Conventional 15 yr Fixed||3.125||3.125||Unchanged|
|Conventional 5 yr ARM||3.000||3.661||-0.04%|
|30 year fixed FHA||3.250||4.206||-0.03%|
|15 year fixed FHA||2.750||3.632||-0.02%|
|5 year ARM FHA||2.875||3.982||-0.04%|
|30 year fixed VA||3.375||3.512||-0.12%|
|15 year fixed VA||2.875||3.181||Unchanged|
|5 year ARM VA||3.250||3.300||-0.01%|
There are no major economic reports due tomorrow.
I expect mortgage rates to fall today and would lock if I had a loan in the works. Your own risk tolerance and goals may vary.
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.
TheÂ 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)