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Posted 08/08/2017


Mortgage Rates Today, August 8, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

Mortgage rates today are little changed from Monday's opening, probably because there were no important economic announcements this morning. (And there won't be until Thursday.) So we'll have to look at today's financial data (below) for interest rate clues.

Mortgage Rates Today

(As of 10:30 am EDT)

Program Rate APR* Change
Conventional 30 yr Fixed 3.750 3.750 Unchanged
Conventional 15 yr Fixed 3.000 3.000 -0.13%
Conventional 5 yr ARM 3.250 3.722 Unchanged
30 year fixed FHA 3.250 4.226 Unchanged
15 year fixed FHA 2.750 3.685 +0.03%
5 year ARM FHA 3.000 4.093 Unchanged
30 year fixed VA 3.500 3.632 Unchanged
15 year fixed VA 3.000 3.307 +0.02%
5 year ARM VA 3.250 3.400 -0.04%

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

Today's Data

Today's economic data are mixed, mostly pointing to increasing rates today. But interest rates are still bumping up and down within a narrow range.

  • Major stock indexes are slightly up but almost unchanged (slightly bad for mortgage rates)
  • Gold prices remained almost unchanged at  $1,264 (neutral)
  • Oil rose by $1 to $49 a barrel (bad for rates, because rising energy prices lead to inflation across the board)
  • The yield for ten-year Treasuries rose three basis points (3/100th of one percent) to 2.27 percent (bad for rates, because mortgage rates often move in the same direction as bond rates)
  • CNNMoney’s Fear & Greed Index increased by two points to a reading of 65, indicating "greed." (This is bad for rates, because of the direction in which the indicator moved -- investors are becoming slightly more confident, which should put more money into stocks and less into bonds, sending bond prices lower and rates up)

Today is looking pretty neutral but leaning toward rate decreases. You can probably get away with floating your rate today.

This Week

This week is very light on economic releases that pertain to interest rates. We don't really get anything until Thursday.

  • Thursday: Weekly Unemployment Claims (242,000 expected;  more would be good for rates, and fewer would be bad)
  • Thursday: Producer Price Index (analysts anticipate a .1 percent growth; more would be bad for rates, and less would be good)
  • Friday: Consumer Price Index (Experts predict it will rise by .2 percent; higher would be bad for rates because two-thirds of the US economy is consumer-based and increasing prices trigger worries about inflation)

Rate Lock Recommendation

Signs point to neutral-to-increasing rates. You may be able to get away with floating, but I'm not sure there is much of an upside to doing so. If your lender offers you a good rate, locking it in may be smarter than holding out.

  • 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 (Aug 19th, 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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