We end the week with reports onÂ 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.
Another highly-important report, Consumer Sentiment, shows how consumers feel about their finances, and indicates their willingness to spend.
Analysts expected it to remain atÂ 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.
(As of 10:00 am EDT)
|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|
Most indicatorsÂ this morning point to increasing rates. Rates have been trending up all week and are finally breakingÂ out of the normal band they occupied for two weeks.
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.
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.
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)