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Posted 09/12/2017

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Mortgage rates today, September 12, plus lock recommendations

mortgage rates today 9/12/17

What's driving mortgage interest rates?

We're getting no economic reports today. But we are getting the new iPhone. Stocks opened higher as everyone awaits the unveiling of a new $1,000 iPhone and other products -- set to take place at 10 am Pacific Daylight Time. Rates opened higher today, and could go higher this morning, depending on the success of the new Apple product launch.

However, the blip could be temporary.

Click to see today's rates (Sep 23rd, 2017)

Mortgage rates today

(As of 10:30 am EDT)

Program Rate APR* Change
Conventional 30 yr Fixed 3.625 3.625 Unchanged
Conventional 15 yr Fixed 3.000 3.000 Unchanged
Conventional 5 yr ARM 3.125 3.666 Unchanged
30 year fixed FHA 3.250 4.180 Unchanged
15 year fixed FHA 2.750 3.658 +0.03%
5 year ARM FHA 3.000 4.114 Unchanged
30 year fixed VA 3.375 3.517 +0.1%
15 year fixed VA 3.000 3.280 +0.02%
5 year ARM VA 3.250 3.404 +0.01%

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

Today's data

Today's data point across the board to increasing rates.

  • Major stock indexes are up substantially (bad for rates)
  • Gold prices fell another $9 an ounce to $1,331 (bad for mortgage rates because gold falls when investors are more confident, and happy investors move out of bonds and mortgage-backed securities, and into stocks. That pushes bond prices down and rates up)
  • Oil rose $1 to $48 a barrel (bad for rates)
  • The yield on ten-year Treasuries rose a hefty five basis points (5/100ths of one percent) to 2.16 percent (bad for rates, because mortgage rates tend to move in the same direction as Treasuries -- however, anything below 2.20 is low)
  • CNNMoney’s Fear & Greed Index rose two points to a "Neutral" 53. This is bad for rates, because the index is moving in a less fearful direction, and less-fearful investors turn away from bonds and mortgage-backed securities. That forces their prices down and rates up.

Mortgage rates today are still very favorable for home buyers. The climate is highly-encouraging for real estate purchases.

This week

We'll get more economic data this week than we did last week, but nothing until Wednesday. here's the schedule:

  • Wednesday: Producer Price Index (PPI) for August will increase by .3 percent if it meets analysts' expectations. This measures inflation at the manufacturing level, and a higher-than-expected reading could push rates higher.
  • Thursday: Weekly Jobless Claims are expected to come in at 300,000. More would be good for rates, and fewer would be bad. But the report is not the most important thing we get this day.
  • Thursday: Consumer price Index (CPI) and Core Inflation Rate will increase by .3 and .2 percent, respectively, if they peg expectations. Higher would be bad for rates (indicating inflation) and lower would be good.
  • Friday: Retail Sales will hit a .1 percent increase if they peg analysts' forecasts. More is bad for rates, and less is good.
  • Friday: Consumer Sentiment, one of the more important measurements, indicates how consumers feel about their economic situation, and predicts their willingness to spend. It's supposed to hit 94.2, down from last mon's 96.8. A bigger drop would be nice for rates, and a smaller one would be bad.

Rate lock recommendation

Mortgage rates are low this morning but data indicate that they could go higher today. As low as they are, I'd probably lock if I had a loan closing soon.

Here's the recommendation:

  • 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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