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Posted 07/07/2017

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Mortgage Rates Today, July 7, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

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, 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.

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 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

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 up (bad for rates).
  • 10-year Treasury yield: up one basis point (1/100th of one percent) to 2.39 percent. (bad for mortgage rates). But at least increases have slowed.
  • Oil dropped $1.50 to $44.50 a barrel (good for  rates).
  • Gold fell $10 an ounce to $1,214 (bad for rates because gold tends to rise when the economy is weak and rates likely to fall).
  • CNNMoney's Fear & Greed Index: Up three points to a neutral 48 (neutral, but the direction is toward a less fearful state, which may be bad for future rates).

Monday

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.

Rate Lock Recommendation

Mortgage rates are trending up, 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.

  • 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 (Jul 22nd, 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)