Mortgage rates today have dropped after some stunning reports from the Bureau of Labor Statistics, University of Michigan, and the Commerce Department.
TheÂ Consumer Price Index (CPI), a key measure of inflation, did not move,Â 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,Â 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.
(As of 10:30 am EDT)
|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%|
Today's indicatorsÂ all point to increasing rates. Probably time to grab whatever bargain you can nail down this morning.
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.
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.
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)