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 JoblessÂ report came in with 248,000 new claims filed. As experts had expected 246,000 new claims, this should not affect mortgage rates much.Â 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.Â 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.
(As of 10:30 am EDT)
|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%|
This morning's data are mixed, but mostly indicate increasing rates.
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.
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.
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)