Mortgage rates today, December 7, 2018, plus lock recommendations

Gina Pogol
The Mortgage Reports contributor

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

What’s driving current mortgage rates?

Mortgage rates today are nearly unchanged following the release of the most important report of the month. November’s Employment Situation Report came in with a 3.7 percent unemployment rate, as expected. However, the economy only added 155,000 jobs last month. Experts had predicted about 190,000, and the monthly average for September, October and November were 170,000.

In addition, wages did not rise as much as expected. This is not great for the economy, but it is good for interest rates.

These results were partially offset by another fairly-important report, November’s Consumer Sentiment Index. This one came in slightly higher than expected at 97.5 versus the predicted 97.3. Consumers are still apparently ready, willing and able to spend.

Because consumer spending drives two-thirds of the US economy, this is key. Spending heats up the economy, which provides jobs, but also triggers inflation, and that is not good for mortgage rates.

These rates are averages. Click here to get your personalized rate now. (May 25th, 2019)
Program Rate APR* Change
Conventional 30 yr Fixed 4.875 4.886 Unchanged
Conventional 15 yr Fixed 4.497 4.516 Unchanged
Conventional 5 yr ARM 4.375 5.005 Unchanged
30 year fixed FHA 4.75 5.76 +0.04%
15 year fixed FHA 3.875 4.827 Unchanged
5 year ARM FHA 4.0 5.42 Unchanged
30 year fixed VA 4.792 4.989 Unchanged
15 year fixed VA 4.063 4.378 -0.06%
5 year ARM VA 4.063 4.653 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

The most important numbers — stocks, oil and Treasuries — indicate increasing rates.

  • Major stock indexes are lower for the third straight day (good for mortgage rates)
  • Gold prices rose $2 to $1,250 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 increased by $2 to $53 a barrel (bad for rates because energy prices play a large role in creating inflation)
  • The yield on ten-year Treasuries rose 5 basis points (5/100th of one percent) to i2.90 percent. That’s bad for borrowers because mortgage rates tend to follow Treasuries
  • CNNMoney’s Fear & Greed Index increased by 2 points this morning, following yesterday’s 11-point drop, to a reading of 13 (out of a possible 100). That score is in the “extreme fear” range. But the direction, less fearful, is bad 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 (May 25th, 2019)

Rate lock recommendation

Friday is not generally the best day to lock. However, we may have seen the bottom for at least the next few weeks. You could probably float until Monday if that will get you 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. (May 25th, 2019)

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: Beige Book (moderate importance)
  • Thursday: October Factory Orders (moderate importance, predicted -.2 percent),
  • ADP Employment (moderate importance, ISM Non-manufacturing Index (moderate importance, predicted 59.8)
  • 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 (May 25th, 2019)

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.