Mortgage rates today, December 21, 2018, plus lock recommendations

Gina Pogol
The Mortgage Reports contributor

Mortgage rates today December 21 2018

What’s driving current mortgage rates?

Average mortgage rates today are nearly unchanged despite the release of several important reports. Personal Income, Consumer Spending and Core Inflation for November all came in lower than expected. That’s good news for mortgage rates. The Consumer Sentiment Index for December did beat expectations, but that wasn’t enough to overcome the hard numbers presented by the Commerce Department.

These rates are averages. Click here to get your personalized rate now. (May 25th, 2019)
Program Rate APR* Change
Conventional 30 yr Fixed 4.75 4.761 Unchanged
Conventional 15 yr Fixed 4.292 4.311 Unchanged
Conventional 5 yr ARM 4.375 4.962 Unchanged
30 year fixed FHA 4.625 5.634 +0.04%
15 year fixed FHA 3.875 4.827 Unchanged
5 year ARM FHA 4.0 5.378 Unchanged
30 year fixed VA 4.667 4.863 -0.04%
15 year fixed VA 4.0 4.315 Unchanged
5 year ARM VA 4.063 4.609 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

All major numbers indicate falling mortgage rates.

  • Major stock indexes opened lower (good for mortgage rates)
  • Gold prices increased again (this time by $1 to $1,260 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 fell another $2 to $46 a barrel (good news for rates because energy prices play a large role in creating inflation)
  • The yield on ten-year Treasuries fell 3 more basis points (2/100th of 1 percent) to 2.79 percent. That’s good for borrowers because mortgage rates tend to follow Treasuries, and this is the lowest reading in months
  • CNNMoney’s Fear & Greed Index remained at 6 (out of a possible 100). That score is in the “extreme fear” range, 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 (May 25th, 2019)

Rate lock recommendation

Today’s data point to lower mortgage rates. You can probably float another day or three (holiday-shortened next week) 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). 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 Friday’s consumer-related data are important. Stay in contact with your lender if you’re still floating a rate.

  • Monday: National Home Builders Association (NAHB) index (moderately important, measures builder confidence)
  • Tuesday: November’s Housing Starts (moderately important, predicting an increase to 1.23 million from 1.228 million)
  • Wednesday: Existing Home Sales for November (moderately important, predicting a drop from 5.22 to 5.15 million). Also, a statement from the Fed.
  • Thursday: Weekly Jobless Claims (predicted: 219,000) and Leading Economic Indicators (moderately important, previous month got a .1 percent increase)
  • Friday: Personal Income, Consumer Spending and Core Inflation for November (important, predicting .3 percent, .4 percent and .2 percent increases, respectively). Consumer Sentiment Index for December

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.