Mortgage rates today, December 11, plus lock recommendations

Gina Pogol
The Mortgage Reports editor

What’s driving current mortgage rates?

Mortgage rates today will get no clues from economic reports. As is typical for Monday’s, there aren’t any. And so far, there are no rate changes.

Lenders will look to  financial data, politics, and Twitter to set today’s mortgage rates.

Rates can drop on Mondays if nothing changes the economy over the weekend. That’s because lenders tend to price conservatively on Fridays, and then drop rates back on Mondays if it’s safe to do so.

Verify your new rate (Dec 12th, 2018)

Mortgage rates today

Program Rate APR* Change
Conventional 30 yr Fixed 3.750 3.750 Unchanged
Conventional 15 yr Fixed 3.250 3.250 Unchanged
Conventional 5 yr ARM 3.500 3.874 Unchanged
30 year fixed FHA 3.500 4.486 Unchanged
15 year fixed FHA 3.125 4.072 Unchanged
5 year ARM FHA 3.375 4.394 Unchanged
30 year fixed VA 3.625 3.798 Unchanged
15 year fixed VA 3.250 3.559 Unchanged
5 year ARM VA 3.625 3.671 Unchanged

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

Financial data that affect today’s mortgage rates

This morning’s financial data mostly offset each other. That’s why rates have changed so little.

  • Major stock indexes are slightly higher across the board (slightly bad for mortgage rates)
  • Gold prices =rose $2 an ounce to $1,250. (That is okay for mortgage rates. In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower).
  • Oil rose $1 to $58 a barrel (bad for mortgage interest rates. Higher energy prices play a large role in creating inflation.)
  • The yield on ten-year Treasuries dropped 1 basis point (1/100th of one percent) to  2.37 percent (good for rates, because mortgage rates tend to follow Treasuries)
  • CNNMoney’s Fear & Greed Index fell 3 points to 61, the dividing line between “neutral” and “greedy.” That’s bad for mortgage interest rates. Because the direction it’s moving is less “greedy” than yesterday. “Fearful” investors push rates down as they leave the stock market and move into bonds, while “greedy” investors do the opposite. That causes rates to rise.

Mortgage rates today remain very favorable for anyone considering homeownership. Residential financing is still affordable.

This week

  • Tuesday, we get the Producer Price Index for November, indicating if there is inflation at the manufacturing level of the economy. October’d increased by .4 percent. Higher is worse for interest rates. Reductions are good for rates.
  • Wednesday delivers the more-important Consumer Price Index for November. October’s increased by just .1 percent. In addition, the Fed adjourns its meeting and investors and lenders expect Chair Janet Yellen to announce a final rate increase for 2017. Any surprises could move markets dramatically.
  • Thursday brings the usual Weekly Unemployment Claims and Retail Sales for November. More unemployment is good for mortgage rates (relieving upward pressure on wages). Rising retail sales. however, could indicate increasing economic activity, which is inflationary and causes interest rates to rise.
  • Friday closes out the week with the Industrial Production report for November. Increasing production means more demand for products, which tends to cause the cost of money to rise.

Rate lock recommendation

In general, 30-day is the standard price most lenders will (should) quote you. The 15-day option should get you a discount, and locks over 30 days usually cost more.

You can probably safely float a mortgage if you’re not closing in the next couple of weeks. With rates so stable, it may be worth waiting for a 15-day lock if you’re, say, 17 days from closing now.

  • 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. Interest rates and yields are not mysterious. You calculate them with simple math.

Verify your new rate (Dec 12th, 2018)