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Posted 07/14/2017

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Mortgage Rates Today, July 14, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

Mortgage rates today have dropped after some stunning reports from the Bureau of Labor Statistics, University of Michigan, and the Commerce Department.

The Consumer Price Index (CPI), a key measure of inflation, did not move, at all in June. Economists had predicted a .1 percent increase. This is great for mortgage rates, because when inflation is not a concern, Fed rate increases are less likely.

Even better, the rate of inflation over the past 12 months slowed to 1.6 percent in June, and it is down from five-year high of 2.7 percent just five months ago.

In addition, Consumer Sentiment, an important indicator of future consumer willingness to spend, nosedived to 93.1. Analysts had expected a .5 point increase to 95.6.

Retail Sales, expected to increase by .1 percent, fell .2 percent. Every report today has pushed rates down. Today is a great day to lock in a rate if you're floating.

Mortgage Rates Today

(As of 10:30 am EDT)

Program Rate APR* Change
Conventional 30 yr Fixed 3.750 3.750 -0.13%
Conventional 15 yr Fixed 3.125 3.125 Unchanged
Conventional 5 yr ARM 3.250 3.735 Unchanged
30 year fixed FHA 3.375 4.324 -0.01%
15 year fixed FHA 2.875 3.759 -0.02%
5 year ARM FHA 3.000 4.130 +0.02%
30 year fixed VA 3.500 3.634 -0.03%
15 year fixed VA 3.000 3.307 -0.12%
5 year ARM VA 3.250 3.413 -0.04%

Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.

Today's Data

Today's indicators all point to increasing rates. Probably time to grab whatever bargain you can nail down this morning.

  • Major stock indexes are all up (bad for rates)
  • Gold is up $13 an ounce to $1,230 (good, because gold rises when the economy softens, and a soft economy is good for rates)
  • The yield for ten-year Treasuries fell seven basis points (7/100ths of one percent) to 2.29 percent (excellent for mortgage rates).
  • CNNMoney’s Fear & Greed Index is up seven more points to a greedy 60 (bad for rates, because greedier investors push rates higher).

Monday

There are no regularly scheduled economic reports due Monday, so it will likely be a slow day. Barring any spectacular global events or inflammatory tweets from the White House.

Rate Lock Recommendation

Rates have fallen in a big way, and I'd lock, lock, lock if I had a loan in process. 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
  • LOCK if closing in 45 days
  • LOCK 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)