Mortgage rates today fell after Federal Reserve Chair Janet Yellen released notes from the speech she will give Congress later this afternoon. The Fed will also release its Beige Book, which contains notes from the previous meeting. Investors follow this stuff avidly, as it may offers clues about the timing of possible rate increases.
Yellen'sÂ statement read, in part, "Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance."
Meaning rate increases may be smaller and / or fewer than previously expected.
(As of 10:30 am EDT)
|Conventional 30 yr Fixed||3.875||3.875||Unchanged|
|Conventional 15 yr Fixed||3.125||3.125||Unchanged|
|Conventional 5 yr ARM||3.250||3.735||-0.04%|
|30 year fixed FHA||3.500||4.443||-0.01%|
|15 year fixed FHA||2.875||3.773||-0.04%|
|5 year ARM FHA||3.000||4.125||Unchanged|
|30 year fixed VA||3.625||3.775||Unchanged|
|15 year fixed VA||3.000||3.307||-0.13%|
|5 year ARM VA||3.375||3.453||Unchanged|
Today's indicators areÂ a completely schizophrenic mixed bag. Probably none of them as important as Ms. Yellen's remarks.
The latter part of the week brings plenty of reportingÂ that could spike mortgage rates or cause them to fall sharply. Stay tuned
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)