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Posted 07/03/2017

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Mortgage Rates Today, July 3, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

Mortgage rates today opened a little higher than last Friday's. This morning, the Institute for Supply Management released its ISM Manufacturing Index, an indicator of the health of manufacturing in the US. Experts didn't expect the index to change from May's level of 54.9, but we got a surprise increase to 57.7.

That's probably enough to push mortgage interest rates a bit higher.

Mortgage Rates Today

Program Rate APR* Change
Conventional 30 yr Fixed 3.875 3.875 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 4.321 Unchanged
15 year fixed FHA 2.875 3.780 +0.01%
5 year ARM FHA 3.125 4.108 Unchanged
30 year fixed VA 3.500 3.670 Unchanged
15 year fixed VA 3.125 3.429 +0.01%
5 year ARM VA 3.375 3.401 Unchanged

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

(As of 10:30 am EDT)

Today's Data

All indicators this morning point to increasing rates. If you are floating a rate at this time, stay in close contact with your lender and be ready to lock.

  • Stock markets: all three major indexes are up (bad for rates).
  • 10-year Treasury yield: up three basis points (3/100th of one percent) to 2.32 percent. (bad for mortgage rates). This rate has increased by .16 percent since early last week.
  • Oil continued its climb to $46.53 (bad for rates).
  • Gold fell by $18 an ounce to $1,242 (bad, because gold falls when the economy is stronger, and a hot economy is bad for interest rates).
  • CNNMoney's Fear & Greed Index: Up sharply by nine points to 58 (bad, because investors are in a much greedier mood than yesterday. Aggressive investing tends to push rates higher).

This Week

We have a short week, but there will be some important reports. Again, stay in contact with your lender if you're floating a rate.

  • Wednesday: May's Factory Orders, expected to fall by .7 percent. A larger decrease would be good for rates.
  • Wednesday: Minutes from the last Federal Open Market Committee (FOMC) will be released.
  • Thursday: Weekly Jobless report, with 246,000 new claims expected. More would be good for rates.
  • Thursday: ADP Employment for June. Thought to foreshadow the Labor Department's monthly report due Friday. previous month's total was 253,000.
  • Friday: The most important report of the month, the Monthly Employment Situation report, with analysts expecting 177,000 payroll additions. More would be bad for rates, and fewer would be good. The 4.3 percent unemployment rate will likely remain unchanged.

Rate Lock Recommendation

Mortgage rates are trending up, and Friday's report could send them higher.

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)