Mortgage rates today got a boost from June's Monthly Employment Report from the Labor Department. The Bureau of Labor Statistics (BLS) reported that the economy added 222,000 jobs in June,Â significantly higher than the 176,000 jobs expected by analysts. The national unemployment rate remained at 4.4 percent.
In addition, May and April totals were revised higher, meaning the employment situation was better than previously thought.
This is not good for mortgage rates, making a new Fed rate hike more likely in the near future.
(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||Unchanged|
|30 year fixed FHA||3.500||4.445||+0.09%|
|15 year fixed FHA||2.875||3.818||-0.05%|
|5 year ARM FHA||3.125||4.165||+0.01%|
|30 year fixed VA||3.625||3.785||+0.01%|
|15 year fixed VA||3.125||3.433||Unchanged|
|5 year ARM VA||3.375||3.457||Unchanged|
This morning's data are mixed, but mostly indicate increasing rates.
As is usual for Mondays, July 10 will bring no scheduled reporting that's pertinent to mortgage rates. Look for guidance in stock markets, global economic news, and random White House tweets.
Mortgage rates are trending up,Â and there is no reason to believe that they will drop back in the near future.
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)