Mortgage rates have been moving up and down within a fairly tight range up until today. Today brings on the Comey testimony, and during the first 20 minutes, rates have climbed.
We got the weekly unemployment numbers today, and this report was good for mortgage rates.
There were 245,000 new claims for benefits last week, when analysts had been expecting 238,000. Higher-than-expected unemployment points to economic softening, which is good for interest rates.
However, this report only covers a week of data. It is not nearly as influential as the monthly report.
|Conventional 30 yr Fixed||3.750||3.750||+0.13%|
|Conventional 15 yr Fixed||3.000||3.000||Unchanged|
|Conventional 5 yr ARM||3.000||3.635||Unchanged|
|30 year fixed FHA||3.250||4.186||Unchanged|
|15 year fixed FHA||2.750||3.607||+0.01%|
|5 year ARM FHA||2.750||3.966||+0.01%|
|30 year fixed VA||3.375||3.505||Unchanged|
|15 year fixed VA||2.875||3.181||+0.02%|
|5 year ARM VA||3.125||3.294||+0.03%|
Most indicatorsÂ point to increasing mortgage rates.
There are no more economic releases scheduled this week.
All indicators this morning show that rates could rise today. If I were in process with a mortgage, and could not withstand a rate increase, I would probably lock. However, everyone's needs and tolerance for risk are different. If you are risk-averse and can secure a satisfactory rate this morning, you might want to grab it.
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)