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Posted 08/11/2017

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Mortgage Rates Today, August 11, Plus Lock Recommendations

mortgage rates today

 What's Driving Mortgage Interest Rates

Mortgage rates today are little changed from yesterday's. The Labor Department released July's Consumer Price Index this morning. Economists predicted it would rise by .2 percent. However, it came in at a seasonally-adjusted .1 percent. That's good for mortgage rates because it means inflation is less of a possibility than previously thought.

In addition, the more important core reading, which excludes volatile food and energy prices, also remained low, increasing .1 percent instead of the anticipated .2 percent.

With two-thirds of the US economy being consumer-based, prices at this level are important to investors. And keeping them down is important to mortgage rates.

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 Unchanged
30 year fixed FHA 3.250 4.214 +0.01%
15 year fixed FHA 2.750 3.677 Unchanged
5 year ARM FHA 2.875 4.062 Unchanged
30 year fixed VA 3.375 3.535 -0.01%
15 year fixed VA 3.000 3.301 +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 mostly point to decreasing or neutral mortgage rates.

  • Major stock indexes are up across the board (bad for mortgage rates)
  • Gold prices are down $1 an ounce (after increasing by $145the previous day) at  $1,292 (pretty much neutral, because gold is very high and the drop is only slight)
  • Oil fell a dollar to $48 a barrel (good-to-neutral)
  • The yield on ten-year Treasuries fell one basis point (1/100th of one percent) at 2.21 percent (good-to-neutral)
  • CNNMoney’s Fear & Greed Index fell another 7 points to a reading of 30. This index was in the 60s only  couple days ago, so it looks like the north Korea thing is putting some real fear onto investors. 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.

Monday

There are no scheduled economic releases for Monday. We will have to predict rates using 3 AM White House tweets, global events, the rumor mill, and indicators like those listed above under 'today's data."

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
  • FLOAT 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)