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Posted 06/02/2017

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Mortgage Rates Today, June 2, 2017, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Rates Today?

Well, the US Unemployment Rate dropped to its lowest level since 2001, according to the Labor Department. That should be great for the economy, but not good for mortgage rates.

However, when t comes to interest rates, it's all about expectations.

While we added 138,000 jobs to the economy last month, that's less than the 174,000 jobs gained in April. Some analysts have been claiming that our job creation efforts have "run out of steam," because this is fewer new jobs than expected. Job gains for March and April were also revised down.

If you're floating an interest rate, that's good for you.

Today's Mortgage Rates

Program Rate APR* Change
Conventional 30 yr Fixed 3.750 3.750 Unchanged
Conventional 15 yr Fixed 3.000 3.000 -0.13%
Conventional 5 yr ARM 3.000 3.629 Unchanged
30 year fixed FHA 3.250 4.206 +0.01%
15 year fixed FHA 2.750 3.611 -0.02%
5 year ARM FHA 2.875 3.981 Unchanged
30 year fixed VA 3.375 3.530 +0.01%
15 year fixed VA 2.875 3.181 Unchanged
5 year ARM VA 3.250 3.293 -0.01%

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

(as of 10:30 am EDT)

 Today's Data

Most indicators do not support rising interest rates. They indicate that investor confidence in the US economy is waning

  • Stock markets: all three major indexes are up (bad for rates)
  • 10-year Treasury yield: down nine basis points (.09) to 2.16 percent (good for rates)
  • Oil fell to less than $48 a barrel (good for rates)
  • Gold is up to $1,278.10 an ounce (good, because gold normally falls when the economy is strengthening and investors are confident)
  • CNNMoney's Fear & Greed Index: Unchanged at a neutral 55. The number is neutral for rates, but it's kind of good because a trend of increasing investor confidence has halted.

Monday

Usually, Monday brings no major data. However, this Monday, we'll get the ISM non-manufacturing index, and April's Factory orders.

Should these rise a great deal, rates could increase, and if they fall (a lot), rates could drop.

However, they are not the most important reports we get each month and are likely to be over-ridden by whatever tweets emit from the White House and other global / political happenings.

Rate Lock Recommendation

If the Employment Report tomorrow follows today's ADP data, we could see a jump in rates tomorrow morning. If it does not, rates could drop. If I could lock a rate I liked today, and I was closing soon, I'd probably do it.

If you're a gambler or can afford to wait for a better rate, you might choose to float. Everyone's goals and tolerance for risk are different.

  • LOCK if closing in 7 days
  • LOCK if closing in 15 days
  • LOCK if closing in 30 days
  • FLOAT if closing in 45 days
  • FLOAT if closing in 60 days

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 (Sep 23rd, 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)