Mortgage rates opened higher this morning as bond markets gave back the gains they made yesterday. They are still operating within a narrow range. In addition, lenders tend to price conservatively on Fridays to protect themselves in case something earthshaking happens over the weekend that would cause them to lose money.
The Commerce Department reported that May's Housing Starts, a reports that tracks groundbreakings of new home projects, was disappointing enough to cause builder stocks prices to crater. Analysts predicted an increase to 1.215 million houses but got just 1.092.
This slowing of the building sector is good for mortgage rates. Less demand for home loans tends to push rates lower.
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. ExpertsÂ expected a reading ofÂ 97.3, up from from May's 97.1. They got a surprising drop to 94.5. That's a big deal because consumer spending drives two-thirds of our economy, and if consumers don't feel confident, they keep their wallets shut.
ThisÂ is good for mortgage rates, because less spending equals less inflation.
|Conventional 30 yr Fixed||3.750||3.750||+0.13%|
|Conventional 15 yr Fixed||3.125||3.125||+0.13%|
|Conventional 5 yr ARM||3.000||3.635||Unchanged|
|30 year fixed FHA||3.250||4.205||+0.01%|
|15 year fixed FHA||2.750||3.679||Unchanged|
|5 year ARM FHA||2.875||4.018||Unchanged|
|30 year fixed VA||3.375||3.538||+0.03%|
|15 year fixed VA||2.875||3.181||Unchanged|
|5 year ARM VA||3.250||3.345||Unchanged|
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.
There are no scheduled economic reports set for release on Monday. Check this blog on Monday for the entire weekly schedule of reports, and how they can affect interest rates.
Mortgage rates today are likely to bump around within a narrow range, unless some bombshell drops later.Â I would probably wait until Monday to see if things are going to settle in at a lower rate. However, your own goals and tolerance for risk may vary. this is only what I would do.
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)