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Lake Tahoe and Incline Village Mortgage Rate Trends – May 26, 2014

Lake Tahoe and Incline Village Mortgage Rate Trends:

This holiday-shortened week brings us the release of five 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 sizable 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. Accordingly, we will not be updating this report tomorrow.

April’s Durable Goods Orders will start this week’s calendar early Tuesday morning. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years such as airplanes, appliances and electronics. It is currently expected to show a decline in new orders of approximately 1.3%, hinting that the manufacturing sector softened a little last month. That would be relatively good news for the bond market and mortgage rates, but this data is known to be quite volatile. Therefore, a small variance from forecasts would likely have little impact on Tuesday’s mortgage rates. The larger the decline, the better the news it is for mortgage rates.

The Conference Board is next with 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 and employment 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 82.7, up from April’s 82.3 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, bringing 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 revision to the 1st quarter Gross Domestic Product (GDP) at 8:30 AM ET. This is the first of two revisions that we get. 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 0.1% increase in the annual rate of growth. Analysts expect a downward revision of 0.6% 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. It will be interesting to see how the markets react if we did have economic contraction during the first three months of the year since bonds tend to thrive during weaker economic conditions.

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 0.3% increase in income and a 0.2% 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 fairly 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 a decline of 0.4 from this month’s preliminary reading of 81.8. A higher reading would be considered bad news for bonds and mortgage pricing while a larger decline should help boost bond prices and lead to a slight improvement in rates.

Overall, I think Tuesday is the best candidate for most active day for mortgage rates this week although Thursday’s GDP reading will draw plenty of attention also if it does show a negative reading. With two relatively important reports scheduled for Friday, it may also be an active day. 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 necessarily have to have important data for the markets and mortgage pricing to move considerably.

Economic Reports for the week of May 19, 2014 which will affect Lake Tahoe and Incline Village Mortgage Rates

Factors Affecting This Week’s Mortgage Interest Rates:

This week brings us the release of only three pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting. None of the economic data is considered to be highly important to the markets and mortgage rates, but they do carry enough significance to influence mortgage rates if they show a wide variance from forecasts. Tomorrow and Tuesday have nothing of importance scheduled, so look for stock movement to heavily influence bond trading and mortgage rates. Stock gains will probably pressure bonds and cause mortgage rates to move higher. If the major stock indexes show losses during the first couple days, we may see bonds thrive and mortgage rates move lower.

The first event of the week comes late Wednesday when the minutes of the last FOMC meeting will be released. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation or geopolitical concerns in the economy and their impact on economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates and their current bond-buying program (QE3). Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading Wednesday.

The National Association of Realtors will give us the first piece of economic data with the release of their Existing Home Sales report at 10:00 AM ET Thursday. This data tracks resales of existing homes in the U.S. during April, giving us a measurement of housing sector strength and mortgage credit demand. This type of data is relevant because a weakening housing sector makes broader economic growth less likely. Current forecasts are calling for an increase in home sales between March and April. Ideally, the bond market would prefer to see a decline, indicating housing sector weakness. A large increase in sales could lead to bond weakness and a small increase in mortgage rates Thursday morning since a strengthening housing sector raises optimism about general economic growth.

April’s Leading Economic Indicators (LEI) will also be released at 10:00 AM ET Thursday. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase from March’s reading, meaning that economic activity is likely to strengthen over the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher Thursday.

The final release is April’s New Home Sales report late Friday morning. It is the sister report of the Existing Home Sales report. This data gives us a similar measurement of housing sector strength and future mortgage credit demand, but tracks a much smaller portion of housing sales than Thursday’s report does. Actually, it probably will not have much of an impact on mortgage pricing unless it shows a sizable variance from forecasts. Analysts are expecting to see gains in sales from March’s level, meaning the new home portion of the housing sector also strengthened last month.

Overall, I believe Thursday will be the most important day for rates, although Friday should be active also as it will be shortened due to the early close ahead of the Memorial Day. I suspect that Tuesday will be the calmest day of the week. Even though there is nothing to be concerned with tomorrow, selling in bonds late Friday means there is a small increase in mortgage rates waiting if your lender did not make an upward revision during afternoon trading. I don’t think we will see as much movement in rates was what we saw last week.

Lake Tahoe and Incline Village Home Loan Trends – May 19, 2014

Quiet Now, But Questions Abound    Commentary ~ May 19, 2014

 Very little obvious change in this past week’s economic indicators. International currencies continued to move in close proximity with one another; interest rates barely budged; the most influential mortgage rates moved hardly at all (again); and the minimal changes to monthly retail sales data told us little.

The MBA figures for mortgage applications, though they didn’t move much from last week, nonetheless suggested that the greater number of applications we’ve seen over the past two weeks aren’t just an anomaly. We will watch to see if mortgage applications continue to rise-as they very well may, as suggested by the recent break in the downward drift.

All told, it’s another of those slightly weeks with slightly positive data and the requirement that we wait to see if any of the incipient optimism we may be beginning to feel will pan out in better home sale data. The next data for existing home sales will be released on May 22…for new home sales on May 23. It’s possible that we’ll have better figures than in the recent past, and that the possibility of an improving real estate market will shake up the overall investment markets. Pay close attention to what the Pending Home Sales Index suggests on May 29 about the strength of future existing home sales.

The PPI-FD: It may take all of us a while to adapt to a newly-organized Producer Price Index. Readers will recall that we’ve worked (and continue to work) with a CPI-Consumer Price Index-that measures changes in consumer prices at the retail level. We have also had a Producer Price Index, though we’ve paid it less attention, and it has tended to tell us the level of inflation at the wholesale level. What we now have is the PPI-FD Index, which combines a larger number of product categories (food, energy, goods, services, etc.), and provides what the producer price index gave us, except that it does so at the “FD” or “final delivery” level. (There are also “intermediate delivery” levels and perhaps we can all soon understand these changes.)

FINAL NOTE: Since becoming director of the Federal Housing Finance Agency in January, Mel Watt hasn’t made specific comments about his plan to support the housing recovery. Until now. He recently said he will reverse a plan to reduce the size of Freddie Mac and Fannie Mae loans. He will also maintain the size of government support for multi-housing loans and, very importantly, will reduce the likelihood that lenders will have to repay the mortgages they write with government backing. Lenders are generally happy with these promises, saying they bode well for the health of the lending industry.

 

Incline Village Home Loans, Lake Tahoe Home Loans, Incline Village Mortgage Rates, and Lake Tahoe Mortgage Rates-The Week of May 11, 2014

Lake Tahoe and Incline Village Mortgage Rate Trends:

This week brings us the release of six economic reports that may have the potential to influence mortgage rates. There is data scheduled to be posted four of the five days with tomorrow being the empty one. Several of the reports are considered to be of elevated importance to the bond market and therefore mortgage rates. This raises the possibility of seeing noticeable movement in rates multiple days this week.

The first piece of data this week is April’s Retail Sales at 8:30 AM ET Tuesday morning. This is an extremely important report for the financial markets since it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.3% increase in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower Tuesday morning as it would signal that economic activity may not be as strong as thought. However, an unexpected increase could renew theories of economic growth that would lead to more stock buying and bond selling, pushing mortgage rates higher.

Wednesday has April’s Producer Price Index (PPI) at 8:30 AM ET. It helps us track inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the manufacturing level, we should see the bond market improve. The overall index is expected to rise 0.2%, while the core data that excludes more volatile food and energy prices has been forecasted to also rise 0.2%. A decline in the core data would be ideal for mortgage shoppers because inflation is the number one nemesis for long-term securities such as mortgage-related bonds. As inflation rises, longer-term securities become less appealing to investors since inflation erodes the value of those securities’ future fixed interest payments. That is why the bond market tends to thrive in weaker economic conditions with low levels of inflation.

Thursday has two reports scheduled with the first being April’s Consumer Price Index (CPI) at 8:30 AM ET. This is the sister report of Tuesday’s PPI report, but measures inflationary pressures at the more important consumer level of the economy. These results will be watched closely and could lead to significant volatility in the bond market and mortgage pricing if they show any surprises. Current forecasts are calling for a 0.3% increase in the overall index and a 0.2% rise in the core data reading. As with the PPI, the core data is the more important of the two readings and will help dictate mortgage rate direction.

April’s Industrial Production is the second of the day but will come at 9:15 AM ET. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.1% increase in production, indicating that manufacturing activity was fairly flat. A decline in output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is not as strong as thought. This report is considered to be moderately important, so it will likely need to show unexpected strength or weakness to cause movement in mortgage rates.

The last two pieces of data will be posted Friday morning. April’s Housing Starts gives us an indication of housing sector strength and mortgage credit demand by tracking newly issued permits and actual starts of new home construction. It is expected to show an increase in new construction starts from March’s reading, hinting at housing sector growth. However, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.

May’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment will close out the week’s calendar just before 10:00 AM ET Friday. This index measures consumer willingness to spend, which relates to consumer spending. If consumers are more confident in their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 84.5, which would be an increase from April’s final reading of 84.1, indicating consumers are a little more confident and more likely to spend than they were last month. If it shows a large decline in consumer confidence, bond prices could rise and mortgage rates would move slightly lower because waning confidence means consumers are less apt to make a large purchase in the near future.

Overall, the calmest day for mortgage rates will likely be tomorrow while the best candidates for most active day are Tuesday and Thursday. Both have key economic data being posted that will attract plenty of attention in the bond market. We also need to watch stocks for mortgage rate movement. Generally speaking, stock weakness makes bonds more attractive while stock gains tend to draw funds from bonds, leading to higher mortgage rates.



Incline Village Home Loans and Incline Village Mortgage Loan Rates – May 4, 2014

Incline Village Home Loans, Incline Village Mortgages, Incline Village Mortgage Rates, and Incline Village Home Loan Rates:

This week has little scheduled in terms of economic data that is expected to drive bond trading and mortgage rates. There are only two relevant monthly or quarterly economic reports on the calendar and both are considered to be fairly insignificant. We do, however, have two Treasury auctions that can potentially affect rates in addition to a couple of congressional appearances by Fed Chairman Yellen the middle part of the week.

Friday’s Employment report gave us some unfavorable results that initially led to weakness in bonds, but that was short-lived as bonds moved into positive ground during late morning trading. That was quite surprising because the data indicated a much stronger than thought employment sector that should have fueled bond selling and stock buying. There is no clear reason why the data was shrugged off. It will be interesting to see if we get a correction in tomorrow’s session or if indeed the data was not a concern to bond traders. The strength we saw Friday and pressure building again in Ukraine could help keep bond yields lower, preventing a sizable upward move in mortgage rates in the immediate future.

This week’s two pieces of monthly or quarterly economic data will come Tuesday and Wednesday, but neither is considered to be highly important. March’s Goods and Services Trade Balance report will be released early Tuesday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is expected to show a $42.5 billion trade deficit, but likely will have little influence on Tuesday’s mortgage rates unless it shows a significant variance from forecasts.

The second will be from the Labor Department, who will release its 1st Quarter Productivity and Costs data early Wednesday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a sizable decline could cause bond prices to drop and mortgage rates to rise slightly Wednesday morning. It is expected to show a 1.2% drop in worker productivity during the first three months of the year.

The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing those afternoons.

The middle of the week also has two speaking engagements by Fed Chairman Janet Yellen. She will appear before the Joint Economic Committee Wednesday morning and the Senate Budget Committee Thursday morning. As with anytime the Fed Chairman is speaking, the media and market participants will be watching. Any surprises could lead to volatility in the markets and movement in mortgage rates.

Overall, I think we will see the most movement in mortgage rates the middle part of the week, but tomorrow’s open could be interesting also due to Friday’s confusing reaction to the key economic data. Wednesday’s 10-year Treasury Note auction could cause movement in rates during afternoon hours. However, any of this week’s moves will most likely be much smaller than some of last week’s changes were, comparatively speaking.

Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – May 4, 2014

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

This week has little scheduled in terms of economic data that is expected to drive bond trading and mortgage rates. There are only two relevant monthly or quarterly economic reports on the calendar and both are considered to be fairly insignificant. We do, however, have two Treasury auctions that can potentially affect rates in addition to a couple of congressional appearances by Fed Chairman Yellen the middle part of the week.

Friday’s Employment report gave us some unfavorable results that initially led to weakness in bonds, but that was short-lived as bonds moved into positive ground during late morning trading. That was quite surprising because the data indicated a much stronger than thought employment sector that should have fueled bond selling and stock buying. There is no clear reason why the data was shrugged off. It will be interesting to see if we get a correction in tomorrow’s session or if indeed the data was not a concern to bond traders. The strength we saw Friday and pressure building again in Ukraine could help keep bond yields lower, preventing a sizable upward move in mortgage rates in the immediate future.

This week’s two pieces of monthly or quarterly economic data will come Tuesday and Wednesday, but neither is considered to be highly important. March’s Goods and Services Trade Balance report will be released early Tuesday morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is expected to show a $42.5 billion trade deficit, but likely will have little influence on Tuesday’s mortgage rates unless it shows a significant variance from forecasts.

The second will be from the Labor Department, who will release its 1st Quarter Productivity and Costs data early Wednesday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a sizable decline could cause bond prices to drop and mortgage rates to rise slightly Wednesday morning. It is expected to show a 1.2% drop in worker productivity during the first three months of the year.

The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing those afternoons.

The middle of the week also has two speaking engagements by Fed Chairman Janet Yellen. She will appear before the Joint Economic Committee Wednesday morning and the Senate Budget Committee Thursday morning. As with anytime the Fed Chairman is speaking, the media and market participants will be watching. Any surprises could lead to volatility in the markets and movement in mortgage rates.

Overall, I think we will see the most movement in mortgage rates the middle part of the week, but tomorrow’s open could be interesting also due to Friday’s confusing reaction to the key economic data. Wednesday’s 10-year Treasury Note auction could cause movement in rates during afternoon hours. However, any of this week’s moves will most likely be much smaller than some of last week’s changes were, comparatively speaking.