Mortgage rates today, December 14, 2018, plus lock recommendations

What’s driving current mortgage rates?

Average mortgage rates today, except for 15-year loans, are unchanged from yesterday. We have two reports to digest.

November’s Industrial Production report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Experts predicted a 0.3 percent increase in output, and actual numbers exceeded that by .3 percent — not good news for mortgage rates.

November’s Retail Sales report came in exactly as expected with a .2 percent increase. This information is neutral as it did not deviate from expert’s predictions.

These rates are averages. Click here to get your personalized rate now. (Dec 14th, 2018)

Financial data affecting today’s mortgage rates

The most important numbers — stocks, oil and Treasuries — are good, neutral, and neutral. We shouldn’t expect much action in mortgage pricing today.

• Major stock indexes opened lower (good for mortgage rates)
• Gold prices fell $7 to $1,240 an ounce. (This 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 remain at $51 a barrel (neutral for rates because energy prices play a large role in creating inflation)
• The yield on ten-year Treasuries is unchanged at 2.90 percent. That’s neutral for borrowers because mortgage rates tend to follow Treasuries
• CNNMoney’s Fear & Greed Index dropped 1 point to a reading of 11 (out of a possible 100). That score is in the “extreme fear” range, and the movement is in a more “fearful” direction, 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 14th, 2018)

Rate lock recommendation

Today’s data point to stagnant mortgage rates. You can probably float another day 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. (Dec 14th, 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: Nothing
• Tuesday: November’s Producer price index (moderately important, a .1 percent increase in the core reading predicted) measures inflation in the manufacturing sector of the economy. If the core reading increases by more than expected, mortgage rates could increase. If it moves less, rates could come down)
• Wednesday: The retail counterpart of the PPI, November’s Consumer Price Index, is even more important because consumer spending is 2/3 of our economy. Analysts expect a .2 percent increase in the core data. We’ll also get a Treasury auction of 10-year Notes. High demand could cause mortgage rates to fall; the opposite is also true
• Thursday: The Treasury will auction 30-year Notes. High demand means better rates, and low demand means higher rates.
• Friday: November’s Industrial Production report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Experts predict a 0.3 percent increase in output. A drop would be good news for mortgage rates, but stronger-than-anticipated would be bad news for rates. November’s Retail Sales report (highly-important, .2 percent increase expected) could drive inflation if sales increased more than analysts predicted. But lower numbers would be good for 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 (Dec 14th, 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.