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Posted 07/17/2017

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Mortgage Rates Today, July 17, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

News events, stock prices, and whatever dog and pony show the White House puts on for us are affecting mortgage rates today. Rates opened mostly unchanged today, and early indicators point to possible small increases later.

In general, anything that seems to indicate the economy is worsening, or that inflation does not threaten, is good for rates. And anything that points to rising wages or prices is bad for rates.

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 3.125 3.125 Unchanged
Conventional 5 yr ARM 3.125 3.691 Unchanged
30 year fixed FHA 3.375 4.318 Unchanged
15 year fixed FHA 2.875 3.751 -0.01%
5 year ARM FHA 3.000 4.123 Unchanged
30 year fixed VA 3.500 3.657 Unchanged
15 year fixed VA 3.125 3.402 +0.1%
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 are a mixed bag, but are weighted toward increasing mortgage rates.

  • Major stock indexes are mixed and have not changed much (neutral)
  • Gold is up $4 an ounce to $1,234 (good, because gold rises when the economy softens, and a soft economy is good for rates)
  • Oil is almost unchanged at $46.43 per barrel (neutral)
  • The yield for ten-year Treasuries rose three basis points (3/100ths of one percent) to 2.32 percent (bad for mortgage rates).
  • CNNMoney’s Fear & Greed Index is up nine more points to a greedy 69 (bad for rates, because greedier investors tend to move their money out of safer bonds, pushing rates higher).

This Week

This week is extremely light on scheduled economic reporting. Investors will probably have better luck with the unscheduled reporting of news events around the world, Presidential tweets, and their gut feelings.

However, in light weeks, less-important reports tend to get more attention than they otherwise would, so it pays to be aware.

  • Tuesday: The National Association of Home Builders will release its Homebuilder Index. Analysts expect the report to show that builder optimism increased slightly, rising from June's level of 67 to a 68 for July. If builders feel the economy is expanding, rates could rise. Increased economic activity fuels concerns about inflation, and that causes bond prices to fall and interest rates to increase.
  • Wednesday: Economists anticipate that June Housing Starts increased from May's level of 1.092 million to 1.170 million. Bond prices tend to fall when housing starts rise, so an increase, especially if it's higher than expected, could cause rates to rise.
  • Thursday: Analysts expect the Labor Department to report that Weekly Jobless Claims fell by 2,000 to 245,000. If actual claims are higher, rates could fall, and if they are fewer, rates could increase. However, it's a weekly report, and not likely to change rates by much either way.
  • Thursday: Leading Economic Indicators flag upcoming changes in the economy which could affect interest rates. They are expected to increase by .4 percent. More would be worse for rates, and less would be better (that jazz about better economy meaning worse rates holds true here).

Rate Lock Recommendation

It's easy to say "lock" when rates drop. But it costs more to lock for longer periods. That must be a consideration when locking for more than 30 days. The better the rate today, the stronger the case for a long-term lock.

  • 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 (Sep 23rd, 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)