//Mortgage rates today, January 7, 2019, plus lock recommendations

Mortgage rates today, January 7, 2019, plus lock recommendations

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

What’s driving current mortgage rates?

Average mortgage rates today are lower for government programs and higher for conventional programs. Perhaps because the government shutdown is reducing demand for government-backed mortgages for those who have deadlines to meet.

December’s ISM Nonmanufacturing index dropped unexpectedly, indicating a possible slowdown in services other than manufacturing. Not good for the economy but possibly good for mortgage rates.

But most data are neutral and markets will most likely be influenced by political news in the US and globally.

These rates are averages. Click here to get your personalized rate now. (Jan 7th, 2019)

Program Rate APR* Change
Conventional 30 yr Fixed 4.583 4.595 +0.05%
Conventional 15 yr Fixed 4.122 4.141 Unchanged
Conventional 5 yr ARM 4.25 4.886 +0.02%
30 year fixed FHA 4.063 5.053 -0.54%
15 year fixed FHA 3.688 4.638 Unchanged
5 year ARM FHA 3.875 5.322 Unchanged
30 year fixed VA 4.583 4.778 -0.04%
15 year fixed VA 3.875 4.189 Unchanged
5 year ARM VA 3.938 4.557 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

Most of this morning’s data doesn’t look good for rate changes. If you can lock in something good now, consider grabbing it.

  • Major stock indexes are up slightly (slightly bad for mortgage rates)
  • Gold prices increased $7 to $1,291 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 remained at $49 a barrel (neutral for rates because energy prices play a large role in creating inflation)
  • The yield on ten-year Treasuries is still at 2.66 percent. That’s neutral for borrowers because mortgage rates tend to follow Treasuries, and this is the lowest reading in months
  • CNNMoney’s Fear & Greed Index rose 6 points to a reading of 16 (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 (Jan 7th, 2019)

Rate lock recommendation

Things are looking pretty neutral today with no push in either direction. If a day or two would get you into a lower tier (30-day to 15-day lock, for instance) you may be able to do better by waiting.

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
  • LOCK if closing in 30 days
  • FLOAT if closing in 45 days
  • FLOAT if closing in 60 days

Lock in your rate. Start here. (Jan 7th, 2019)

This week

Expect light trading and few reports.

  • Monday: ISM nonmanufacturing index (previous 60.7)
  • Tuesday: nothing
  • Wednesday: Fed Meeting Minutes, 10-Year Treasury Auction
  • Thursday: 30-Year Treasury Auction
  • Friday: Consumer Price Index (CPI)

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 (Jan 7th, 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.


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