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Posted 06/13/2017

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Mortgage Rates Today, June 13, 2017, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Rates Today

Today brings a Treasury auction (30-year Notes) and May's Producer Price Index (PPI). The PPI tracks inflationary pressures for producers. Analysts anticipated no change in the overall reading and 0.2 percent increase in the core data (the core excludes food and energy prices).

However, while May's PPI revealed no change in the overall reading, the core number, which is more important, rose  by 0.3 percent. This shows that inflationary pressure at the producer level is stronger than previously thought. And that's not good for mortgage rates.

Mortgage Rates Today

Program Rate APR* Change
Conventional 30 yr Fixed 3.750 3.750 Unchanged
Conventional 15 yr Fixed 3.125 3.125 Unchanged
Conventional 5 yr ARM 3.125 3.678 Unchanged
30 year fixed FHA 3.250 4.216 +0.01%
15 year fixed FHA 2.750 3.682 +0.06%
5 year ARM FHA 2.875 4.014 Unchanged
30 year fixed VA 3.375 3.539 +0.01%
15 year fixed VA 2.875 3.181 Unchanged
5 year ARM VA 3.250 3.350 Unchanged

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

As of 10:30 EDT

Today's Data

Indicators are mixed, which probably caused most rates to be unchanged. However, the ones that did change increased, which is not so good.

  • Stock markets: all three major indexes are up (bad for rates)
  • 10-year Treasury yield: down one basis point (one 100th of one percent) to 2.21 percent (good for mortgage rates)
  • Oil is currently at $45.68 a barrel, down slightly from yesterday. That's good for rates because rising energy prices fuel inflation.
  • Gold is down to $1,265. (bad, because gold normally falls when inflation is a concern)
  • CNNMoney's Fear & Greed Index: Down one point to a neutral 54.  (That is good for rates. Even though the result is neutral, the direction of change is toward a more fearful state.)

This Week

Unlike last week, this week will be extremely busy. six pieces of economic data that are relevant to mortgage rates along with a couple of Treasury auctions.

  • Wednesday: May's Retail Sales report measures consumer spending. Experts predict a 0.1 percent increase last month. More would be bad for rates, but a lower reading would be good. Also, May's Consumer Price Index (CPI). Analysts expect the overall reading to be unchanged with the core reading up 0.2 percent. Weaker numbers would be good for mortgage rates.
  • Wednesday: The Fed will release its updated estimates for future economic activity. GDP growth, unemployment and inflation numbers could change rates if  there are revisions to major economic numbers. Anything indicating economic heat is bad for rates.
  • Thursday: May's Industrial Production measures manufacturing sector strength. Analysts are expecting to see a 0.1 percent increase. Anything less would be good for rates.
  • Thursday: Weekly unemployment claims. Analysts expect 245,000 claims.
  • Friday: May's Housing Starts tracks groundbreakings of new home projects. Analysts predict an increase in starts of new homes last month. A decline would be good for mortgage rates.
  • Friday: June's preliminary reading to the University of Michigan's Index of Consumer Sentiment measures consumer willingness to spend. It's one of the more important reports. It is expected to come in at 97.0, down from from May's 97.1. A smaller-than-expected reading is good for mortgage rates because less spending means fewer concerns about inflation.

Rate Lock Recommendation

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.

  • 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 (Jul 20th, 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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