Mortgage rates today opened lower than yesterday's, but the break may be short-lived. While Janet Yellen sparked demand for Treasuries after implying that rate hikes may be fewer and smaller than previously thought, the European Central Bank (ECB) signaled exactly the opposite -- noting that it will be more aggressive about heading off inflation in the near future.
In response, Treasuries this morning are taking a hit, and most data support rising interest rates.
In US economic news, the Weekly Jobless Claims, expected to fall from last weekâ€™s 248,000 to 245,000, came in a little higher at 247,000. That's good for rates, but the report is not important enough to change rates with such a small variance from expectations.
Finally, the Producers Price Index (PPI), which measures activity at the manufacturing level, increased by .1 percent, when experts anticipated no change. That's slightly bad for mortgage rates.
(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||Unchanged|
|30 year fixed FHA||3.375||4.336||-0.11%|
|15 year fixed FHA||2.875||3.778||+0.01%|
|5 year ARM FHA||3.000||4.106||-0.02%|
|30 year fixed VA||3.500||3.664||-0.11%|
|15 year fixed VA||3.125||3.428||+0.12%|
|5 year ARM VA||3.375||3.456||Unchanged|
Today's indicatorsÂ all point to increasing rates. Probably time to grab whatever bargain you can nail down this morning.
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)