Check here daily if you have a mortgage in process or are shopping for a home loan. You’ll see what economic data and financial reports are affecting mortgage rates today before deciding to lock or float your mortgage rate.
April 16, 2021
Current Mortgage Rates and Rate Lock Recommendation
- Today's mortgage rates
- Type of LoanRateAPR
- Conventional 5/1 ARM2.471%3.199%
- Conventional 15-Year Fixed2.11%2.192%
- Conventional 30-Year Fixed2.762%2.814%
- FHA 5/1 ARM3.875%3.828%
- FHA 15-Year Fixed2.243%3.402%
What Factors Are Moving Mortgage Rates Today?
Today's mortgage rates opened nearly unchanged from yesterday. Financial data are all over the map, mostly offsetting each other. Friday is not historically the best day to lock in, so unless you are closing very soon, you can probably leave your loan unlocked until next week.
Today’s Rate Lock Recommendation
Mortgage rates are little changed from yesterday's lows. If you're not closing soon and need to wait a day or two to get into a cheaper locking tier (for instance, a 7-day lock instead of a 15-day lock), you can probably do so safely.
Locking isn't a no-brainer for longer periods, even in a rising rate environment, because locking a loan costs money. The interest rate you'll get with a 7-day lock is lower than that of a 15-day lock, and so on. Locks longer than 30 days often come with upfront fees (.5% is typical for 45 days). So, the decision to lock is a balancing act; when you lock, you're betting that rates won't fall before you close and that you'll close before your lock expires. Your decision depends on your tolerance for risk.
Rate Lock Recommendation
Lock your rates if your closing date is within:
- 7-day closing
- 15-day closing
- 30-day closing
Float your rates if your closing date is within:
Economic Data Affecting Today’s Mortgage Rates
Today's indicators are mixed and mostly offset each other. Keep an eye on oil prices and the 10-year Treasury yields if you're contemplating a rate lock. Here are the data influencing mortgage rates today:
Major stock indexes opened higher across the board. Stock market prices are fairly good predictors of interest rates. When stocks increase, the economy is heating up. This usually leads to higher mortgage and other interest rates. Falling stock prices normally correlate with lower interest rates. This morning's prices are bad for mortgage rates.
The 10-Year Treasury note yield edged 1 basis point (1/100th of 1%) to 1.58%. Yields on 10-year Treasuries usually move in the same direction as mortgage rates, so today's move is good for mortgage rates.
Oil prices rose by $0.16 to $62.94 per barrel. That's slightly bad for mortgage rates. Oil is a limited resource required for most economic activity in the US. Rising oil prices trigger fears of inflation and this often causes interest rates to increase, while falling oil prices have the opposite effect.
The price of gold rose $40 to a patriotic $1776 per ounce. Increasing gold prices often go in tandem with lower interest rates, but rates often rise as gold prices fall. Today's change is good for mortgage rates.
CNNMoney’s Fear & Greed Index measures investor sentiment with a variety of metrics. When investors are confident, or “greedy,” mortgage rates tend to increase. And when investors become more “fearful,” interest rates fall. Today's index jumped by 8 points to a "greedy" 58. The scope and direction of this movement are bad for mortgage rates.
Almost anything that impacts the world economy can cause mortgage interest rates to change. In most cases, news that indicates economic weakening is good for mortgage rates. Investors switch to safer investments like Treasuries or mortgage-backed securities (MBS) and are willing to accept lower returns in exchange for safety.
News that suggests economic strengthening is generally bad for mortgage rates. This is because economic heat can also cause fears of inflation. Investors then demand higher interest rates to compensate for inflationary risk, because no one wants to be earning 3% in a 4% world.
This Week’s Upcoming Releases
This week is fairly light on major reports. Wednesday may deliver the most volatility.
- Day of the WeekUpcoming Release
- MondayNo reports scheduled.
- TuesdayMarch's Consumer Price Index (CPI) is an important measurement of inflation that can really push mortgage rates if the actual numbers miss forecasts. Analysts predict an increase of .5% for the overall reading and .2% for the more-important core reading, which excludes volatile food and energy prices. Higher inflation would be bad for mortgage rates, while lower numbers would be good.
- WednesdayNo reports are scheduled. However, the Federal Reserve will release its Beige Book, which contains financial projections from the Fed, Market participants watch it closely for clues about the extent and timing of future interest rate hikes. The book could send markets spinning or be completely boring.
- ThursdayLast week's unemployment claims report is expected to show that 705,000 claims for benefits were filed. More claims would be bad for the economy but good for mortgage rates. Fewer claims would be good for the recovery, but possibly lead to inflation — bad for mortgage rates. The National Association of Home Builders (NAHB) will release its NAHB index that tracks builder sentiment is anticipated to come in at 82, down from 84 in February. Higher numbers would be bad for rates while lower numbers would be good. Retail Sales for March are predicted to increase by 5.6% (4.8% excluding autos). This report is important and if the actual numbers vary significantly, it would push mortgage rates sharply lower or higher.
- FridayThe preliminary Consumer Sentiment numbers for April come in. Analysts anticipate that the index will rise almost 4 points to 88.1. A higher number would be bad for mortgage rates, while a smaller one would be favorable.
Why Do Mortgage Rates Change?
In general, positive economic news causes interest rates (including mortgage rates) to increase. That’s because an expanding economy can increase the rate of inflation, and investors demand higher returns when they are concerned about inflation. When the economy is shaky, investors become less worried about how much their money earns and more worried about retaining their principal. So demand for safe investments like bonds increases, driving their prices up and interest rates down. The example below illustrates this.
How Bonds Work
Bond issuers create bonds paying a specific interest rate at a predetermined price, called "par." Par pricing is normally $1,000 for a $1,000 bond, and the interest rate for that bond is called the "coupon rate." If you buy a $1,000 bond paying 5%, your actual yield would be the same as the coupon rate.
Your interest rate: $50 interest / $1,000 bond price = 5%
But bonds don't stay at par pricing—they are subject to market supply and demand just like shares of stock are, and their price can rise and fall all day long. These price movements are triggered by events that impact the global economy. Events that signal economic heating and possible inflation cause the demand for bonds to fall and rates to increase. While events that indicate economic instability or failure push investors into safe havens like bonds. Demand for these instruments causes their prices to rise and rates to fall. The examples below illustrate the upward and downward interest rate movements in response to economic conditions.
When Interest Rates Fall
Suppose that after you purchase your bond, the economy becomes troubled. Perhaps by political instability or a global pandemic. Investor demand for safe places to put their money skyrockets and 5% becomes highly desirable. You sell your $1,000 bond to an investor for $1,500. The buyer gets the same $50 a year in interest that you were getting. It’s still 5% of the $1,000 coupon. However, the yield drops.
Your buyer’s interest rate: $50 annual interest / $1,500 bond price = 3.33%
When Interest Rates Rise
The opposite occurs when the economy improves. Suppose that after you purchased your $1,000 bond, the pandemic is resolved with the invention of a vaccine, and threats of war subside in volatile countries. The stock market is taking off and 5% doesn’t look so great anymore. Investor demand falls for your bond and you can only sell it for $750. The buyer pays less and enjoys a higher yield.
Your buyer’s interest rate: $50 annual interest / $750 bond price = 6.67%
The relationship between bond prices and interest rates is predictable. It’s simple math.
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