Today's mortgage rates dropped this morning based on some disappointing economic news.
May's Industrial Production measuresÂ manufacturing sector strength. Analysts anticipated a 0.1 percent increase, and got a disappointing .4 percentÂ decrease.Â Because this points to softening in the manufacturing sector, and bad news for the economy, this is good news for mortgage rates.
Weekly unemployment claims. Analysts expect 245,000 claims, but actual claims came in at 237,000. This indicates that the labor market is stronger than experts thought, which is slightly bad for mortgage rates. However, this s only a weekly report, so its importance is somewhat diminished.
|Conventional 30 yr Fixed||3.625||3.625||-0.13%|
|Conventional 15 yr Fixed||3.000||3.000||-0.13%|
|Conventional 5 yr ARM||3.000||3.635||-0.04%|
|30 year fixed FHA||3.250||4.190||-0.01%|
|15 year fixed FHA||2.750||3.683||+0.02%|
|5 year ARM FHA||2.875||4.018||-0.04%|
|30 year fixed VA||3.375||3.506||-0.01%|
|15 year fixed VA||2.875||3.181||Unchanged|
|5 year ARM VA||3.250||3.347||+0.01%|
As of 10:30 EDT
Indicators are mixed, and should mostly cancel each other out. Rates may not change much today, unless global political or economic events or random White House tweets cause them to move.
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.
Mortgage rates today are likely to bump around within a narrow range, unless some bombshell drops later. If I could get a rate I was happy with, and I was closing in the next month, I'd probably lock. But your tolerance for risk and your 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)