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Posted 06/30/2017

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Mortgage Rates Today, July 1, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

We end the week with reports on personal income, consumer spending, and the core inflation rate. Those stats indicate if inflation is a concern, and they could push rates sharply (higher or lower). figures were either neutral or bad for mortgage interest rates.

  • Personal income -- up .4 percent when analysts expected an increase of .3 percent. That's bad for rates.
  • Consumer spending and the core inflation rate: exactly as predicted, with .1 percent increases. That's neutral.

Another highly-important report, Consumer Sentiment, shows how consumers feel about their finances, and indicates their willingness to spend.

Analysts expected it to remain at its current level of 94.5. However, consumer confidence did increase last month to 95.1. That is significant enough and important enough to push mortgage rates higher.

Mortgage Rates Today

(As of 10:00 am EDT)

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 3.250 3.722 Unchanged
30 year fixed FHA 3.375 4.318 +0.09%
15 year fixed FHA 2.875 3.767 +0.07%
5 year ARM FHA 3.125 4.103 +0.04%
30 year fixed VA 3.500 3.649 +0.02%
15 year fixed VA 3.125 3.417 +0.01%
5 year ARM VA 3.375 3.398 Unchanged

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

Most indicators this morning point to increasing rates. Rates have been trending up all week and are finally breaking out of the normal band they occupied for two weeks.

  • Stock markets: tow of three major indexes are up (bad for rates).
  • 10-year Treasury yield: unchanged at 2.29 percent (neutral, but this is is high).
  • Oil is up again a few cents to $45.31 (slightly bad for rates).
  • Gold rose $5 an ounce to $1,245 (good because gold rises when the economy is softer, and a softer economy is good for interest rates).
  • CNNMoney's Fear & Greed Index: Down an unprecedented 18 points to 49 (good, because investors are in a much more fearful mood than yesterday. Fear tends to push rates down).

Monday

Monday brings us the ISM Manufacturing Index, an indicator of the health of manufacturing in the US. Experts don't expect the index to change from May's level of 59.1. An increase would be bad for mortgage rates, and a decrease would be good.

Rate Lock Recommendation

Mortgage rates are trending up.

I would probably lock if rates were in my strike zone and I was closing soon. However, your own goals and tolerance for risk may vary. This is only what I would do.

  • 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 (Sep 24th, 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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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)