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Posted 08/09/2017

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Mortgage Rates Today, August 9, Plus Lock Recommendations

mortgage rates today

What's Driving Mortgage Interest Rates

Mortgage rates today opened lower, probably because of the uncertainty created by yesterday's North Korea threat.

The thing with interest rates is that they tend to go lower in times of economic uncertainty or weakness. That's because investors want a "safe haven" like bonds for their money until the crisis blows over. Demand for bonds pushes their prices up, which makes rates fall (see below).

Click to see today's rates (Aug 19th, 2017)

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 Unchanged
Conventional 5 yr ARM 3.125 3.678 -0.04%
30 year fixed FHA 3.250 4.214 -0.01%
15 year fixed FHA 2.750 3.688 Unchanged
5 year ARM FHA 2.875 4.058 -0.04%
30 year fixed VA 3.375 3.535 -0.1%
15 year fixed VA 3.000 3.293 -0.01%
5 year ARM VA 3.250 3.400 Unchanged

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 lower rates today. But interest rates are still bumping up and down within a narrow range.

  • Major stock indexes are down across the board (good for mortgage rates)
  • Gold prices are up $14 an ounce at  $1,278 (good for rates because gold increases in weak economies, and weak economies are good for mortgage rates)
  • Oil remains almost unchanged at $49 a barrel (neutral)
  • The yield on ten-year Treasuries fell five basis points (5/100th of one percent) to 2.22 percent (good for rates, because mortgage rates often move in the same direction as bond rates)
  • CNNMoney’s Fear & Greed Index plunged 18 points to a reading of 47. The size and direction of this change are notable, pointing to lower rates. (This is great for rates, because of the direction in which the indicator moved -- investors are becoming much less confident, which should put more money into bonds and less into stocks, sending bond prices higher and rates down)

Today is leaning toward rate decreases, but once the Korean threat dissipates, rates may bump back up.

This Week

This week is very light on economic releases that pertain to interest rates. Tomorrow's news is the first pertinent release of the week.

  • 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-decreasing 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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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)