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Mortgage rates today, June 28, 2018, plus lock recommendations

Gina Pogol
The Mortgage Reports editor

What’s driving current mortgage rates?

Mortgage rates today are unchanged, again. Individual lenders’ rates are varying, but the averages we report have not. Yesterday’s Treasury auction of 5-year Notes did not affect interest rates either — demand was okay, but not earth-shattering. Today’s 7-year notes will hopefully fare better.

This morning’s Weekly Jobless Claims exceeded expectations (227k vs 220k, which was good for rates, but not good enough for rates. It takes a lot of variances to move the needle when it’s only a weekly report. At 10 AM EDT, we’ll get the results of today’s  Treasury auction (7-year Notes), and that may help if demand is strong.

Rates Below Are Averages. Get Your Personalized Rates Here. (Nov 19th, 2018)
Program Rate APR* Change
Conventional 30 yr Fixed 4.75 4.761 Unchanged
Conventional 15 yr Fixed 4.333 4.353 Unchanged
Conventional 5 yr ARM 4.313 4.753 Unchanged
30 year fixed FHA 4.458 5.465 Unchanged
15 year fixed FHA 3.75 4.701 Unchanged
5 year ARM FHA 4.188 5.255 Unchanged
30 year fixed VA 4.542 4.736 Unchanged
15 year fixed VA 3.75 4.063 Unchanged
5 year ARM VA 4.25 4.468 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

Investors look pretty scared this morning. That would be good except that their chief fear seems to be inflation, and that’s bad. Fear of inflation tends to beget inflation, as investors require higher returns to compensate for something that hasn’t happened yet. But this behavior creates inflation. yes, we have nothing to fear but fear itself.

  • Major stock indexes opened  very slightly higher (neutral for mortgage rates)
  • Gold prices fell $3 to $1,252 an ounce. (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 jumped $1 to $74 a barrel (that’s very bad for mortgage rates when we blow through the $70 threshold  because energy prices play a large role in creating inflation)
  • The yield on ten-year Treasuries is still 2.85 percent. That is neutral (and the only good news) for mortgage rates because mortgage rates tend to follow Treasuries
  • CNNMoney’s Fear & Greed Index dropped 8 points to 38 (out of a possible 100). That is a more fearful direction,  into the “fear” range. That would be good if the reason were not inflation and trade-war related. Normally, “fearful” investors push bond prices up (and interest rates down) as they leave the stock market and move into bonds, while “greedy” investors do the opposite
Verify your new rate (Nov 19th, 2018)

This week

This week offers a few pertinent economic releases in addition to a couple of Treasury auctions. Most of the releases we get won’t be of major importance. The trade war news and overseas response will likely drive rates more than these reports.

  • Monday: New Home Sales report for May (forecast: 667,000 sales)
  • Tuesday: April Case-Shiller Home Price Index  Consumer Confidence Index for June (forecast: 128)
  • Wednesday: May Durable Goods Orders (forecast: -1.4%), Pending Home Sales for May, Treasury auction (5-year Notes)
  • Thursday: Weekly Jobless Claims (previous: 218,000), Treasury auction (7-year Notes)
  • Friday: Personal Income, Consumer Spending, and Core Inflation for May, (forecast: increase by .4%, .4% and .2%, respectively), Consumer Sentiment for June (forecast: 99.3)

Rate lock recommendation

Rates are trending higher over the long-term, with occasional dips. Today’s economic indicators are mostly unfavorable, so if your rate has not increased or even dropped this morning, grab it.

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. If you can get a better rate (say, a .125 percent lower rate) by waiting a couple of days to get a 15-day lock instead of a 30, it’s probably safe to consider.

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. I recommend:

  • 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
Lock in your rate. Start here. (Nov 19th, 2018)

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 (Nov 19th, 2018)