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Mortgage rates today, December 4, 2018, plus lock recommendations

Gina Pogol
The Mortgage Reports editor

mortgage rates today, today's mortgage rates, current mortgage rates

What’s driving current mortgage rates?

Average mortgage rates this morning are lower! The news of Trump’s possible ending of the trade war with China initially produced a surge in the economy, which is bad for mortgage rates. But this optimism later evaporated as more bad news for the President surfaced with the Mueller investigation.

Economies don’t like instability, and fearful investors tend to exit stock markets and park their money in bonds and mortgage-backed securities (MBS), which pushes interest rates lower.

We have no economic reporting this morning, and today’s data (below) point to falling rates.

These rates are averages. Click here to get your personalized rate now. (Dec 11th, 2018)
Program Rate APR* Change
Conventional 30 yr Fixed 4.958 4.97 -0.04%
Conventional 15 yr Fixed 4.497 4.516 -0.09%
Conventional 5 yr ARM 4.438 5.022 -0.01%
30 year fixed FHA 4.708 5.718 -0.04%
15 year fixed FHA 3.938 4.89 Unchanged
5 year ARM FHA 4.0 5.414 -0.08%
30 year fixed VA 4.792 4.989 -0.08%
15 year fixed VA 4.125 4.441 Unchanged
5 year ARM VA 4.125 4.67 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

Financial data are point mostly to lower rates. You may be able to get a better deal by waiting to lock. But if you are closing soon and can grab a low rate this morning, you should probably pull the trigger and lock.

  • Major stock indexes opened lower (good for rates)
  • Gold prices increased for the second straight day, this time by $6 to $1,245 an ounce. (This 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 remain at $53 a barrel (neutral for rates because energy prices play a large role in creating inflation)
  • The yield on ten-year Treasuries remains fell six basis points (6/100th of one percent) to 2.95 percent. That’s great news for borrowers because mortgage rates tend to follow Treasuries
  • CNNMoney’s Fear & Greed Index dropped 8 points to a reading of 31 (out of a possible 100). That score is solidly in the “fear” range. And the direction, more fearful, is good for rates. “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite
Verify your new rate (Dec 11th, 2018)

Rate lock recommendation

Mortgage rates have been coming down lately, but this trend is likely to be short-term, and eventually swallowed up by increases. If your closing is still a few weeks out, you may want to float and get into a better tier (for instance, drop from a 45-day lock to a 30-day, or a 30-day into a 15-day lock). But if closing soon, current rates are attractive enough to feel good about.

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 your 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
  • FLOAT if closing in 30 days
  • FLOAT if closing in 45 days
  • FLOAT if closing in 60 days
Lock in your rate. Start here. (Dec 11th, 2018)

This week

This week offers fewer reports, but Tuesday and Thursday’s consumer-related data are important. Stay in contact with your lender if you’re still floating a rate.

  • Monday: ISM Manufacturing Index (moderate importance, predicted 58.2)
  • Tuesday: Nothing
  • Wednesday: ADP Employment (moderate importance, ISM Non-manufacturing Index (moderate importance, predicted 59.8), Beige Book (moderate importance)
  • Thursday: October Factory Orders (moderate importance, predicted -.2 percent)
  • Friday: November Employment Situation Report (high importance, 3.7 percent unemployment predicted), November Consumer Sentiment Index (moderate importance)

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 (Dec 11th, 2018)

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.