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Posted 06/14/2017

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Mortgage Rates Today, June 14, 2017, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Rates Today

Mortgage rates today may be pretty volatile, bouncing around as news comes in. This morning, things are pretty quiet in advance of the Fed's post-meeting announcements. The release covers the Fed's economic projections, including its rate hike projection.

However, we also have a couple of reports and the regular data listed below the rates chart.

May's Retail Sales report measures consumer spending. Experts predicted a 0.1 percent increase last month, but we actually got a .3 percent reduction -- good for rates.

May's Consumer Price Index (CPI). Analysts expect the overall reading to be unchanged with the core reading up 0.2 percent. We got a .1 percent drop -- also good for 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 4.197 -0.02%
15 year fixed FHA 2.750 3.659 -0.02%
5 year ARM FHA 3.000 4.061 +0.05%
30 year fixed VA 3.375 3.520 -0.02%
15 year fixed VA 2.875 3.181 Unchanged
5 year ARM VA 3.250 3.340 -0.01%

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. This may change after the Fed's announcement.

  • Stock markets: all three major indexes are up slightly (slightly bad for rates)
  • 10-year Treasury yield: down eight basis points (8/100ths of one percent) to 2.13 percent (this is a huge drop and good for mortgage rates)
  • Oil is currently at $46.28 a barrel, up slightly from yesterday. That's bad for rates because rising energy prices fuel inflation.
  • Gold is up sharply to $1,279. (good, because gold normally rises when the economy softens and inflation is not a concern)
  • CNNMoney's Fear & Greed Index: Up one point to a neutral 55.  (That is slightly bad for rates. Even though the result is neutral, the direction of change is toward a less fearful state.)

This Week

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

  • Later today: 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. We will publish the results and our analysis just after 2 pm today.
  • 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

What will happen to mortgage rates today is anyone's guess. It depends on the Fed's post-meeting projections. Analysts expect a rate hike form this meeting, but how many will follow is what enquiring minds want to know. I'd probably float and see what happens, unless I could not withstand an increase. In that case, I'd lock now.

  • 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 (Aug 19th, 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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