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Mortgage rates today, March 27, 2018, plus lock recommendations

Gina PogolThe Mortgage Reports Contributor

What’s driving current mortgage rates?

Mortgage rates today Mortgage rates today are going their own way — shorter-term products increasing, longer ones decreasing or unchanging. The folks at Mortgage News Daily stated that “bonds aren’t very interested in following any other market in lock-step these days.”

What we have is a confused market waiting for Thursday, when the most important news comes in.

Meanwhile,  the Case-Shiller Home Price Index for January (previous month increased 6.3 percent) nearly pegged expectations, increasing by 6.2 percent. That’s a neutral thing for rates.

It was the Consumer Confidence Index for March (expected to increase from February’s 130.8 to 131.3), that blew analysts’ predictions out of the water by dropping to 127.7. The index tracks Americans’ views of current economic conditions and their expectations for the next six months, which should predict economic activity and inflation potential.

That decrease should be excellent news for mortgage interest rates.

Verify your new rate (Aug 21st, 2018)

Mortgage rates today

Program Rate APR* Change
Conventional 30 yr Fixed 4.667 4.678 Unchanged
Conventional 15 yr Fixed 4.167 4.186 -0.04%
Conventional 5 yr ARM 4.125 4.622 +0.08%
30 year fixed FHA 4.5 5.507 -0.04%
15 year fixed FHA 3.625 4.575 -0.13%
5 year ARM FHA 3.938 4.99 +0.03%
30 year fixed VA 4.542 4.736 Unchanged
15 year fixed VA 3.813 4.126 Unchanged
5 year ARM VA 4.125 4.249 +0.01%

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 offset each other as we wait for the most important trading day this week, Thursday.

  • Major stock indexes opened mixed and flat (neutral for rates, because rising stocks typically take interest rates with them — making it more expensive to borrow)
  • Gold prices reversed their course, falling  $9 an ounce to $1,343. (That is bad 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 pushed about $1 higher to nearly $66 a barrel (bad for mortgage rates, because higher energy prices play a large role in creating inflation)
  • The yield on ten-year Treasuries fell 1 basis point (1/100th of 1 percent) to 2.83 percent.This is good for mortgage rates because they tend to follow Treasuries
  • CNNMoney’s Fear & Greed Index edged up by 1 point to a reading of 9 (out of a possible 100). That’s considered the “extreme fear” range.  Moving into a less fearful state is usually bad 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. However, if what investors ear most is inflation, look out.

This week

This week brings some pretty heavy financial reporting.

  • Monday: Nothing
  • Tuesday: Case-Shiller Home Price Index for January (previous month increased 6.3%) and the Consumer Confidence Index for March (expected to increase from February’s 130.8 to 131.3)
  • Wednesday: Pending Home Sales for February (previous month fell by 4.7%)
  • Thursday: Weekly Unemployment (forecast is 330,000 new claims for benefits), Personal Income, Spending, and Inflation for February, (expect increases of .4%. ,2% and .2%) and Consumer Sentiment for March (predicted to remain at 102)
  • Friday: Nothing (Good Friday)

Rate lock recommendation

Mortgage rates today are behaving very unpredictably. If you absolutely need to hit a rate that’s in your strike zone now or are very risk-averse, you probably want to lock. If I were floating a rate right now, I’d probably chance it that rates will move up and down and try to grab mine when it’s down. But this is a very short-term strategy.

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 (Aug 21st, 2018)