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End of Day Mortgage Rate Update-May 31, 2013

Tahoe Mortgage Rates and Tahoe Home Loan Rates:

Inflation remained tame in April and below the U.S. Federal Reserves higher end target of 2%. The Core Personal Consumption Expenditure, which measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices, was unchanged in April and has been trending lower in recent months. This could signal a slowdown in economic activity.

In the manufacturing sector, the Chicago Purchasing Managers Index rose to 58.7 in May, well above the 49.0 reading seen in April. Within the report it showed that the employment component jumped to 58.1 from 48.7. Manufacturing across the nation has been slowing in the past few months and though one report doesn’t constitute a pattern, it was good news for manufacturing.

Consumer sentiment rose to its highest level in nearly six years in May to 84.5 due to a rise in home prices and a surge in U.S. Stock markets – the index was at 76.4 in April. However, in a separate report, consumer spending fell by 0.2% last month making it the first decline since May of 2012. The drop in spending could be due in part to the rise in payroll taxes this year – consumer spending drives 70% of U.S. economic activity.

Morning Interest Rate Update-May 31, 2013.

Tahoe Mortgage Rates and Tahoe Home Loan Rates:

Friday’s bond market initially opened in positive territory following the release of favorable economic news but has since turned south following late morning data. The stock markets have not having nearly the reaction to the data that bonds are having. The Dow and Nasdaq are both down a couple of points. The bond market is currently down 12/32, which will likely push this morning’s mortgage rates higher by .250 – .375 of a discount point over yesterday’s morning pricing.

Yesterday’s 7-year Treasury Note auction actually went pretty well with several indicators that we use pointing towards a decent level of investor interest. That helped boost bond prices during afternoon trading yesterday and led to some lenders improving rates. Unfortunately, that improvement was erased with this morning’s bond selling.

The Commerce Department gave us April’s Personal Income and Outlays data early this morning with an announcement of a 0.1% increase in income and a 0.2% decline in spending. Both readings were weaker than what analysts were expecting to see (0.1% rise in both). That indicates that consumers had a little less money to spend than thought and actually spent less than they did in March. These readings point towards slower economic activity, making them good news for the bond market and mortgage rates.

Late this morning, the University of Michigan revised their Index of Consumer Sentiment for May. It showed a reading of 85.5 that exceeded forecasts of 83.7. This was the highest reading since July 2007 and indicates that consumers were more optimistic about their own financial situations than analysts expected. Since that usually means consumers are more willing to spend, we consider this bad news for the bond market and mortgage rates.

Next week has come very important economic data scheduled. There are reports that are relevant to the bond market and mortgage rates scheduled four of the five days, including Monday’s ISM manufacturing index. It will be posted late Monday morning and is one of the more important reports we get each month. The week closes with the almighty Employment report next Friday. Look for details on all of next week’s events in Sunday’s weekly preview.

 

End of Day Mortgage Rate Update-May 30, 2013

Tahoe Mortgage Rates and Tahoe Home Loans:

Today’s economic data came in weaker than expected as Americans filing for first time unemployment benefits rose while growth in the U.S. was a bit less than expected. In addition, the housing market received some mixed news.

The Labor Department reported this morning that Weekly Initial Jobless Claims rose by 10,000 in the latest week to 354,000 and above the 340,000 that was expected. The labor markets are producing jobs at a modest rate, but not enough to bring down the stubbornly high unemployment rate, currently at 7.5%. The four-week moving average for new claims, which smoothes out seasonal abnormalities, edged up 6,750 to 347,250.

Growth in the first quarter of 2013 rose by 2.4%, as measured by the Gross Domestic Product (GDP) data that was released this morning. GDP rose by 2.4% for the second reading for the first three months of the year and the Bureau of Economic Analysis said that overall economic activity is not greatly changed. GDP measures the output of goods and services produced by labor and property located across the nation.

The last data point this morning was a decline in Pending Home Sales rising by only 0.3% in April and below the 1.5% increase expected. However, the index now stands at 106.0, the highest reading since April of 2010 and is up 10.3% since April of 2012. The National Association of Realtors said that due to inventory shortages, higher home sales will push up home values to the highest level in five years. The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes.

 

Morning Interest Rate Update-May 30, 2013

Tahoe Mortgage Rates and Tahoe Home Loan Rates:

Thursday’s bond market has opened relatively flat despite the release of some favorable economic news. The stock markets are showing early gains with the Dow up 78 points and the Nasdaq up 22 points. The bond market is nearly unchanged from yesterday’s close, but we should still see an improvement in this morning’s mortgage rates of approximately .250 – .375 of a discount point due to a rally during late afternoon trading Wednesday.

There were two pieces of economic data posted early this morning. The Labor Department announced that 354,000 new claims for unemployment benefits were filed last week, up from the previous week’s 344,000. Analysts were expecting to see no change in the number of initial claims filed, so we can consider this data good news for the bond market and mortgage since it hints at a weaker employment sector than many had thought. However, with the report tracking only a single week’s worth of new claims, its impact on today’s mortgage rates has been fairly minimal.

The second report of the morning was the first revision to the 1st quarter Gross Domestic Product (GDP). It came in with a 2.4% annual rate of growth, falling just shy of analysts’ forecasts and the previous estimate of 2.5%. This indicates that the economy grew at a slightly slower pace during the first three months of the year than previously thought. That is technically good news for the bond market and rates, although it was not enough of a change to cause much concern or joy in the markets. Accordingly, it has also had little influence on today’s mortgage pricing.

Also today is the 7-year Treasury Note auction that has the potential to affect bond trading and possibly mortgage rates. Yesterday’s 5-year Note sale went relatively well with several indicators pointing towards a respectable level of investor demand. Not overly strong or weak. That eases some concerns about today’s auction. The bond market did improve after results of the 5-year Note sale were posted yesterday, so as long as we don’t see a weak interest in today’s auction, we could get further improvements to mortgage rates after results are released at 1:00 PM ET.

Tomorrow also has two pieces of relevant economic data, both of which have the potential to move mortgage rates. April’s Personal Income and Outlays data is the first at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up over two-thirds of our economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.1% increase in income and a 0.1% rise in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The last relevant data of the week will come from the University of Michigan, who will update their Index of Consumer Sentiment for May just before 10:00 AM ET tomorrow. This type of data is watched closely because when consumers are feeling more confident about their own financial situations, they are more likely to make a large purchase in the near future. Rising confidence and the higher levels of spending that usually follow are considered negative news for bonds and mortgage rates. Tomorrow’s report is expected to show no change from this month’s preliminary reading of 83.7, but it is worth reminding ourselves of the similar CCI from Tuesday that showed a spike in confidence. A higher reading would be considered negative for bonds and mortgage pricing.

End of Day Mortgage Rate Update-May 29, 2013

Tahoe Mortgage Rates and Tahoe Home Loan Rates:

Home loan rates have pushed up to their highest levels in a year due to better than expected economic data and fears that the U.S. Federal Reserve may pull back on its stimulus program that was put in place to promote jobs and speed up the economic recovery. The Mortgage Bankers Association reported today that its Market Composite Index, a measure of loan application volume, fell nearly 9% in the latest week and has declined three weeks in a row. The refi index fell 12% while the purchase index increased by 3%.

Over on the foreclosure front, CoreLogic reports that completed foreclosures in April amounted to 52,000, which is a 16% decline from the 62,000 that were completed in April of 2012. From March to April foreclosures were flat. By comparison, between the 2000 and 2006, completed foreclosures averaged 21,000 per month across the nation. Since September of 2008 there have been 4.4 million completed foreclosures.

Lender Processing Services, a leading provider of integrated technology, data and analytics to the mortgage and real estate industries, reported yesterday that home prices rose 1.4% from February to March and were up 7.6% year-over-year from March 2012 to March 2013. The average home price was $213,000 in March, up almost 3% from the beginning of the year.

 

Morning Interest Rate Update-May 29, 2013

Tahoe Mortgage Rates and Tahoe Home Loan Rates:

Wednesday’s bond market has opened in positive territory with stocks showing early losses. The Dow is currently down 83 points while the Nasdaq has lost 15 points. The bond market is currently up 7/32, but this is not enough of an improvement to erase losses from afternoon trading yesterday. Despite the positive open, we will still likely see an increase of .125 – .250 of a discount point in this morning’s mortgage rates if comparing to Tuesday’s morning pricing.

Even with this morning’s gains, the yield on the benchmark 10-year Treasury Note currently stands at 2.14%. That is a long way from the 1.63% we were at on May 2nd. Unfortunately, I don’t see it moving back down to that level anytime in the near future. There is plenty of discussion in the marketplace that the recent spike is overkill and not justified. While I do agree with that theory, I also see little in the near future that is likely to cause yields (and mortgage rates) to reverse course. Unless the major stock indexes go into selling mode and tank significantly, the next item that could do this is May’s Employment report on Friday June 7th. There is some important economic data set for release between now and then, but that date is what we should be looking forward to for potential relief. And we don’t want to think about how bad it will be if that report shows stronger than expected employment numbers.

There is nothing scheduled for release today that is worth watching with exception to the 5-year Treasury Note auction. These types of sales do not directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions in mortgage rates. On the other hand, strong sales usually makes bonds more attractive to investors and brings more funds into the bond market. The buying of bonds that follows usually translates into lower mortgage rates. Tomorrow’s 7-year Note auction is actually closer in term to mortgage-related bonds, however, the first of the two gives us an idea of demand levels and often has the bigger impact than the second. Results will be posted at 1:00 PM ET today and tomorrow, so look for any reaction to come during afternoon hours.

Tomorrow has some relevant economic data scheduled that may influence bond trading and mortgage rates. The first is the weekly unemployment update from the Labor Department at 8:30 AM ET. They are expected to announce that 340,000 new claims for unemployment benefits were filed last week, matching the previous week’s total. The higher the number of new claims, the better the news it is for bonds and mortgage rates because rising claims indicates a weakening employment sector. However, since this is only a weekly report, it takes a wide variance from forecasts for it to have an impact on mortgage pricing.

Also early tomorrow morning, the first revision to the 1st quarter Gross Domestic Product (GDP) will be posted. The second revision to this index comes next month but isn’t expected to carry much importance. The GDP is the sum of all goods and services that are produced in the U.S. and is considered to be the best measurement of economic growth. Last month’s preliminary reading revealed a 2.5% increase in the annual rate of growth. Analysts expect no change in this update. If the revision comes in much stronger than expected, we may see the bond market react negatively and mortgage rates move higher because it would mean the economy was stronger than thought last quarter. A much weaker reading could lead to stock selling, a bond rally and lower mortgage rates.

End of Day Mortgage Rate Update-May 28, 2013

Tahoe Mortgage Rates and Tahoe Home Loan Rates Update

Home prices rose at the fastest annual pace in 7 years in March as the sector continues to rebound after the housing bubble burst. The Case Shiller 20-city Home Price Index rose 10.9% year-over-year ended in March, above the 10.1% expected. On a month-over-month basis, the index rose 1.12%. In the first quarter of 2013, the seasonally adjusted national index was up 3.9%, above the 2.4% from the final quarter of 2014.

Global Stocks are rising after central banks around the globe reassured investors that easy money policies will continue through 2013 and should last until mid-2014. U.S. Stocks opened sharply higher and is putting a big dent in Bond prices. The recent fall in Bond prices have caused home loan rates to rise in the past few week, though rates are still closer to record low levels. Bond prices and home loan rates work in inverse relationships, as Bond prices rise, rates tend to move lower and vice versa.

The summer driving season kicked off this past weekend with gas prices at the pump at $3.65 a gallon on Memorial Day. This good news for motorists is that prices tend to move lower in June and will most likely decline as the summer unfolds.

Americans across the nation are feeling more optimistic on the economy due to an improving job market and better than expected economic data that has been reported lately. The Consumer Confidence Index rose to 76.2 in May, the highest level since February 2008. A spokesperson for the Conference Board, which issues the survey, said, “Consumers’ assessment of current business and labor-market conditions was more positive and they were considerably more upbeat about future economic and job prospects.”

Rates are Rising, Indeed-Commentary May 28, 2013

Tahoe Mortgages and Tahoe Home Loans-Blog:

 It is always somewhat bemusing to read in the financial press that applications for new mortgages declined sharply in the past week when mortgage interest rates jumped by 9 basis points one week and 8 basis points the next, as occurred in the past two weeks. That’s a total of 17 basis points…about a sixth of a percent. It depends on how you look at it, but to most of us, a sixth of a percent isn’t usually a deal-breaker if we’re arranging new home financing.

 So let’s look at it more closely. As of May 9, the Freddie Mac average 30-year fixed rate was 3.42%. A $400,000 mortgage at 3.42% requires a monthly payment of $1778.36. At 3.59%, where the Freddie Mac average ended up on May 23, the monthly payment only rises to $1816.33.

 Who is going to drop out of an origination process when his or her loan threatens to cost about $38 per month more than first anticipated? It’s a curious question, given that the composite of mortgages applied for dropped by a very significant 9.8%.

 But refinancings took the much more strenuous dive, declining by 12%. This is to be expected, since the aim of refinancers is almost always simply to arrange a loan with a lower interest rate than their existing loan has. But consider…the number of refinancings moves on a dime, depending on the slightest up or down for interest rates. When rates give any indication that they are rising, the number of applications for refinancings takes a quick drop. But it is rare that the number of applications for purchase money loans moves truly significantly because of a rise of, say, 20 basis points for mortgages.

 And, to the naked eye, purchase money loans actually remained in the channel they’ve occupied for several weeks—maybe up 4% one week, and down 4% the next. There is very little significance to such small moves.

 Ultimately, there isn’t that much to shout about here. The big news, it turns out, is that the credit markets are so ready to believe that interest rates are starting a serious rise (as they may be, indeed) that the financial news is full of the confident assertion that rates are rising for real now.

 To say it again: They may indeed be initiating a lasting rise that takes them a good deal higher. But they also may not. We don’t have any news here that is substantial enough to hang a theory on. Once again, it’s time to wait.

 We will watch to see if rates continue to rise a bit more quickly—to see if a trend is developing. We will also remain a bit concerned that the markets may take evidence of higher rates as reasons to run from real estate financing. Perhaps, in spite of the sound and fury, real estate will prove to remain one of the strongest plays there is in the investment world…and rising rates may awaken investors further to that possibility. Time, as always, will tell.

KEY INDICATORS
[5/28/13]

Gold (Comex)

  $1393.70/ounce [up]

 Crude Oil (Brent)

  $102.56/brl [down]

 U.S. Dollar to…

  Euro                    0.7733 [down]

  Japanese Yen    101.07 [down]

  Chinese Yuan     6.1211 [down]

  Canadian Dollar  1.0334 [up]

 6-mo Treasury Bill Yield   0.07%

10-yr Treasury Note Yield 2.01%

  6-mo down 1 bp

  10-yr up 6 bps

11th Dist Cost of Funds 0.967%

  [May]

 HSH average mortgage rates

  Index includes jumbo rates [5/24]

30-yr Fixed-rate Mortgage  3.81%

15-yr Fixed-rate Mortgage  3.04%

1-yr ARM  2.85% 

  30-yr up 5 bps

  15-yr up 6 bps

  1-yr ARM unchanged

 Freddie Mac weekly average rate

  3.59% [up 8 bps]

 Mortgage Bankers Association

Mortgage Applications Index

  For week ending 5/17

Overall

  Down 9.8%

    [Down 7.3% prior week]

Purchase money loans

  Down 3%

    [Down 4% prior week]

Refinancing loans

  Down 12%

    [Down 8% prior week]

 Jobless Claims 5/18

  340,000

  [prior week 363,000 (rev)]

  4-week moving average 339,500

  [up]

 Existing Home Sales Apr

  Up 0.6% – SFR sales up 1.2% –

  months’ supply rose from 4.7 to

  5.2 months’ worth of listings –

  median prices up 4.8%

 New Home Sales Apr

  Up 2.3% on limited inventory –

  median price up 8.3%

 Durable Goods Orders Apr

  Up 3.3% month-to-month – up

  2.4% y-to-y

 COMING INDICATORS

 Thursday May 30

  Gross Domestic Product (GDP)

  Pending Home Sales

 Friday May 31

  Personal income

  Consumer Sentiment

 Monday June 3

  ISM Manufacturing Index

  Construction Spending

Morning Interest Rate Update-May 28, 2013

Tahoe mortgages and Tahoe Home Loans-Interest Rate Update:

Tuesday’s bond market has opened down sharply due to an early rally in stocks and stronger than expected economic news. The stock markets are starting the holiday-shortened week in rally mode with the Dow up 203 points and the Nasdaq up 47 points. The bond market is currently down 29/32, which is going to push this morning’s mortgage rates higher by approximately .625 – .750 of a discount point over Friday’s pricing.

The Conference Board gave us today’s only economic news but it surely didn’t help us at all. They announced that their Consumer Confidence Index (CCI) rose to 76.2 this month, exceeding forecasts of 72.5. This was a sizable jump from April’s 68.1 and the highest reading since February 2008. That makes the data negative for the bond market and mortgage rates because rising confidence means that consumers are more likely to make large purchases in the near future, fueling economic growth.

This morning’s unfavorable data is the only reason for today’s early bond selling and spike in mortgage rates. The bond market was already showing significant weakness before the data was posted at 10:00 AM ET. Therefore, we can consider this an extension of the general negative tone in the bond market that has caused bond yields to rise so rapidly. The benchmark 10-year Treasury Note is currently at 2.10%. The more it moves away from 2.00%, the less likely we will see mortgage rates recover even a small portion of their recent increases in the immediate future.

Tomorrow has nothing scheduled that is expected to affect mortgage rates except the first of this week’s two Treasury auctions that are worth watching. The Fed will auction 5-year Notes tomorrow and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors that brings more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours tomorrow and Thursday.

Overall, it appears that today may have been the most important day of the week for mortgage rates after all. Following the holiday weekend, stocks are moving much higher while bonds are in the tank. That equates to another jump in mortgage rates, unfortunately, with little to look forward to for relief. We do have the revised GDP reading Thursday, but unless that shows a significant downward revision it will probably not be of much help. Friday has some fairly important economic data scheduled for relief, however, none of it is considered to be of market-moving importance. The best scenario for a sizable improvement in mortgage rates would be a huge stock sell-off that would erase several hundred points from the Dow. As long as stocks remain in positive ground, it will be difficult for bonds and mortgage rates to gain any traction the next several days.

Week End Econonic Update-May 26, 2013

This holiday-shortened week brings us the release of four relevant economic reports for the markets to digest in addition to Treasury auctions that have the potential to influence bond trading and mortgage rates. None of the reports are considered to be key data, but all of them do carry enough significance to affect mortgage rates if their results show any surprises. The financial and mortgage markets will be closed tomorrow in observance of the Memorial Day holiday and will reopen for regular trading Tuesday morning.

 
The Conference Board will start the week’s events by posting their Consumer Confidence Index (CCI) at 10:00 AM Tuesday. This data measures consumer willingness to spend. If the index rises, it indicates that consumers felt better about their personal financial situations and therefore are more apt to make large purchases in the near future. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending makes up over two-thirds of the U.S. economy. A decline in the index should boost bond prices and push mortgage rates lower Tuesday morning while a larger than expected increase would likely cause rates to move higher. It is expected to show a reading of 72.5, up from April’s 68.1 reading.

Wednesday has nothing scheduled that is expected to affect mortgage rates except the first of this week’s two Treasury auctions that are worth watching. The Fed will auction 5-year Notes Wednesday and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors that brings more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours Wednesday and Thursday.

The next report will be Thursday’s release of the first of two revisions to the 1st quarter Gross Domestic Product (GDP) at 8:30 AM ET. The second revision to this index comes next month but isn’t expected to carry much importance. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth. Last month’s preliminary reading revealed a 2.5% increase in the annual rate of growth. Analysts expect no change in this update. If the revision comes in much stronger than expected, we may see the bond market react negatively and mortgage rates move higher because it would mean the economy was stronger than thought last quarter. On the other hand, a much weaker reading could lead to stock selling, a bond rally and lower mortgage rates.

Friday has the remaining two pieces of data. April’s Personal Income and Outlays data is the first at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. As we pointed out above, since consumer spending makes up over two-thirds of our economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.1% increase in income and a 0.1% rise in spending. Weaker readings would be considered good news for bonds and mortgage rates.

The last relevant data of the week will come from the University of Michigan, who will update their Index of Consumer Sentiment for May late Friday morning. This type of data is watched closely because when consumers are feeling more confident about their own financial situations, they are more likely to make a large purchase in the near future. Rising confidence and the higher levels of spending that usually follow are considered negative news for bonds and mortgage rates. Friday’s report is expected to show no change from this month’s preliminary reading of 83.7. A higher reading would be considered negative for bonds and mortgage pricing.

Overall, it is difficult to label any particular day as the week’s most important. The most important data is Tuesday’s or Friday’s releases, assuming that Thursday’s GDP reading does not show a sizable revision. With two relatively important reports scheduled for Friday, I am leaning towards it as likely to be the most active, but Tuesday could also bring noticeable changes to rates after the long holiday. The least active day will probably be Wednesday unless the stock markets rally or show sizable losses. Please keep in mind though, as we saw several days the past couple weeks, we don’t have to have important data for the markets and mortgage pricing to move considerably. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.