Mortgage rates today, March 23, 2018, plus lock recommendations

Gina Pogol
The Mortgage Reports editor

What’s driving current mortgage rates?

Mortgage rates today are still feeling the effects of late moves in US stock markets yesterday. The Dow had a very bad afternoon as investors panicked over probable retaliation over Trump’s crackdown on China, and readied for the trade war that will likely follow.

In general, trade wars are bad for stocks and good for bonds (and mortgage rates).

We did get some modestly-important economic reporting this morning.

Durable Goods Orders, a report that tracks activity at the producing level of the economy, came in much higher than expected — increasing by 3.1 percent instead of the 1.8 percent predicted by analysts. That’s very nice for the economy and less-nice for rates. However, this report is known to be volatile, so it gets less importance than it otherwise would.

New Home Sales affect mortgage rates two ways — first, by creating economic activity and increasing jobs and wages in a huge industry, and second, by igniting demand for mortgages, which can increase lender margins and profits (and rates). This morning’s report from the government showed that sales fell for a third straight month and supply expanded to the highest since 2009, good for anyone planning to buy a home soon.

Verify your new rate (Jan 16th, 2019)

Mortgage rates today

Program Rate APR* Change
Conventional 30 yr Fixed 4.622 4.633 Unchanged
Conventional 15 yr Fixed 4.208 4.227 +0.04%
Conventional 5 yr ARM 4.125 4.547 Unchanged
30 year fixed FHA 4.417 5.423 Unchanged
15 year fixed FHA 3.75 4.701 +0.06%
5 year ARM FHA 3.875 4.959 Unchanged
30 year fixed VA 4.5 4.694 Unchanged
15 year fixed VA 3.75 4.063 Unchanged
5 year ARM VA 4.125 4.242 Unchanged

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

Financial data affecting today’s mortgage rates

Today’s early data are mixed and mostly tend to offset each other. hence the limited movement in rates today.

  • Major stock indexes opened sharply down but recovered somewhat and are flat (neutral for rates, because rising stocks typically take interest rates with them — making it more expensive to borrow)
  • Gold prices increased again, nearly $10 an ounce to $1,347. (That is good 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 prices rose $1 to $65 a barrel (bad for mortgage rates, because higher energy prices play a large role in creating inflation)
  • The yield on ten-year Treasuries increased by 3 basis points (3/100th of 1 percent) to 2.83 percent after a massive ten-point tumble yesterday. This is bad for mortgage rates because they tend to follow Treasuries
  • CNNMoney’s Fear & Greed Index edged lower by 1 point to a reading of 9 (out of a possible 100). That’s considered the “extreme fear” range.  Moving into a more fearful state is usually good for rates. “Fearful” investors generally push bond prices up (and interest rates down) as they leave the stock market and move into bonds, while “greedy” investors do the opposite.

This week

This week is pretty light on financial reporting.

  • Monday: Nothing
  • Tuesday: Nothing
  • Wednesday: Existing Home Sales
  • Thursday: Weekly Unemployment, Leading Economic Indicators
  • Friday: Durable Goods OrdersNew Home Sales

Rate lock recommendation

Friday is not traditionally the best day to lock. If you can afford to wait, say you are 16 days from closing and waiting would get you a lower 15-day lock instead of a higher 30-day lock, it’s probably worth the risk. Note that your own situation may differ and your tolerance for risk may not be the same as mine.

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

In a rising rate environment, the decision to lock or float becomes complicated. Obviously, if you know rates are rising, you want to lock in as soon as possible. However, the longer you lock, the higher your upfront costs. If you are weeks away from closing on your mortgage, that’s something to consider. On the flip side, if a higher rate would wipe out your mortgage approval, you’ll probably want to lock in even if it costs more.

If you’re still floating, stay in close contact with your lender, and keep an eye on markets.

  • 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

Video: More about mortgage rates

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 now 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 (Jan 16th, 2019)