What’s driving current mortgage rates?
Stocks bounced back yesterday afternoon (and are continuing their run up this morning), pulling some mortgage rates today with them. We have no economic reports today, but the Treasury is auctioning off Ten-year Notes this afternoon. Strong demand from investors could push bond and mortgage-backed securities (MBS) prices higher, which would cause mortgage rates to fall. If the auction gets a lot of disinterested investors, prices will fall and rates will rise (there is a section below that shows how this simple math works).
Mortgage rates today
Financial data that affect today’s mortgage rates
Today’s early data mostly point to increasing mortgage rates.
- Major stock indexes opened higher, continuing to recover after Monday’s massive selloff (bad for rates, because rising stocks typically take interest rates with them — making it more expensive to borrow )
- Gold prices fell $11 an ounce to $1,324, continuing yesterday’s downward trend. (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 fell $2 to $62 barrel (good for mortgage rates, because higher energy prices play a large role in creating inflation)
- The yield on ten-year Treasuries rebounded 6 basis points (6/100th of one percent to 2.80 percent. That’s bad for mortgage rates because mortgage rates tend to follow Treasuries
- CNNMoney’s Fear & Greed Index remained in the “extreme fear” range, rising one point to 18. That’s good for future rates because in this case, greed is NOT good. “Fearful” investors push rates down as they leave the stock market and move into bonds, while “greedy” investors do the opposite. That causes rates to rise
Mortgage rates today remain very favorable for anyone considering homeownership. Residential financing is still affordable.
This week, we can catch our breath; there are very few pertinent economic reports scheduled. In fact, other than a few Treasury auctions and Thursday’s weekly unemployment report, we’ll be relying almost entirely on economic data (like the list above), global financial and political news, and those 3:00 am tweets from the White House.
Tomorrow, we will get a 10-year Treasury Note auction. This should provide clues about future demand for mortgage-related securities. If the auction gets strong demand from investors, we bond and mortgage-backed securities (MBS) prices should increase, pulling mortgage rates lower.
Rate lock recommendation
In general, 30-day is the standard price most lenders will (should) quote you. The 15-day option should get you a discount, and locks over 30 days usually cost more. 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. This week is so volatile, however, you might snag a better deal if you jump in when stocks are down and lenders improve pricing. Just understand that these things move very quickly when participants are nervous — and they are.
If you’re still floating, stay in close contact with your lender, and keep an eye on markets.
- 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