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Posted 07/06/2017


Mortgage Rates Today, July 6, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

Mortgage rates today look to finally break out of the narrow range in which they have been operating. Unfortunately for anyone floating a rate, their trajectory is upward.

Yesterday afternoon, the Fed released minutes from its last Federal Open Market Committee meeting. The notes point to at least one more rate increase even without inflation pressures.

Today's Weekly Jobless report came in with 248,000 new claims filed. As experts had expected 246,000 new claims, this should not affect mortgage rates much. The actual numbers are quite close to expectations, and it's only a weekly report anyway. It would take a major discrepancy to move the needle here.

Next, we have the ADP Employment report for June. Investors follow this report from the payroll processing giant, because it's thought to foreshadow the Labor Department's monthly report due Friday. The previous month's total was 230,000 new jobs. This one came in with just 158,000 new jobs, sharply below the 185,000 anticipated by analysts.

Still, job growth is positive, and this shortfall did not appear to push rates lower.

Mortgage Rates Today

(As of 10:30 am EDT)

Program Rate APR* Change
Conventional 30 yr Fixed 3.875 3.875 Unchanged
Conventional 15 yr Fixed 3.250 3.250 Unchanged
Conventional 5 yr ARM 3.375 3.778 +0.06%
30 year fixed FHA 3.375 4.357 -0.1%
15 year fixed FHA 3.000 3.872 +0.07%
5 year ARM FHA 3.125 4.159 +0.04%
30 year fixed VA 3.625 3.774 -0.01%
15 year fixed VA 3.125 3.433 Unchanged
5 year ARM VA 3.375 3.457 +0.05%

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

Today's Data

This morning's data are mixed, but mostly indicate increasing rates.

  • Stock markets: all three major indexes are down (good for rates).
  • 10-year Treasury yield: up four basis points (4/100ths of one percent) to 2.38 percent. (bad for mortgage rates). This is nearly .25 percent higher than it was a couple weeks ago.
  • Oil is up .50 to $45.94 (bad for  rates).
  • Gold is up very slightly to $1,224 after a significant drop yesterday (neutral, because it did not change much).
  • CNNMoney's Fear & Greed Index: Down 13 points to 45 (neutral, but the direction is toward a more fearful state, which may be good for future rates).

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.

  • 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)