Mortgage rates today (for government loans, anyway) got a sharp upward bump, probably due to an unexpectedÂ WeeklyÂ Jobless ClaimsÂ report. While this is not normally the most influential report, because it's only weekly data, these numbers really moved the needle.
The Labor Department reported thatÂ 243,000 newly-unemployed filed claims for benefits last week, fewer than the 250,000 that analysts had predicted. However, the bigger news was thatÂ total laid-offÂ employees gettingÂ unemployment benefits dropped to 1.89 million last month. That's the lowestÂ total inÂ almost 44 years.
Less unemployment usually equals wage pressures, which translates t inflation, which worries investors and causes interest rates to rise. Whether this is a long-term move or a short-term bump is anyone's guess.Click to see today's rates (Oct 22nd, 2017)
|Conventional 30 yr Fixed||3.750||3.750||Unchanged|
|Conventional 15 yr Fixed||3.125||3.125||Unchanged|
|Conventional 5 yr ARM||3.250||3.703||Unchanged|
|30 year fixed FHA||3.375||4.360||+0.03%|
|15 year fixed FHA||3.000||3.946||+0.06%|
|5 year ARM FHA||3.250||4.228||+0.01%|
|30 year fixed VA||3.500||3.672||+0.03%|
|15 year fixed VA||3.250||3.559||+0.06%|
|5 year ARM VA||3.375||3.457||+0.01%|
Today's indicatorsÂ mostlyÂ point to lower or unchanging rates. However, investors (and lenders) are likely waiting for tomorrow's important reports -- the CPI and Consumer Sentiment reports -- before making any major changes.
Mortgage rates todayÂ are still very favorable for home buyers. The climate is highly-encouraging for real estate purchases.
This week is pretty light on information in the early days. On Wednesday, though, we get the Federal Open Market Committee (FOMC) minutes from its monthly meeting. This is the group most think of when they refer to "The Fed." And investors follow these notes closely for clues about the possibility and timing of future rate increases.
If I had a loan that was closing very soon, or just a low tolerance for risk, I'd lock, because some of these indicators are pretty volatile.Â Here's the recommendation:
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 payingÂ five percent interest ($50) each year. (This is called its â€ścoupon rate.") Thatâ€™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.
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.
TheÂ buyer gets an interest rate, or yield, of only 4.2 percent. And thatâ€™s why, when demand for bonds increases and bond prices go up, interest rates go down.
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 gettingÂ $700. The buyer gets the same $50 a year in interest, but the yield looks like this:
The buyerâ€™s interest rate is now slightly more than seven percent.Click to see today's rates (Oct 22nd, 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)