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Lake Tahoe Mortgage Rate Trends- May 28, 2015

Thursday’s bond market has opened flat despite early stock weakness. The major stock indexes are showing noticeable losses with the Dow down 72 points and the Nasdaq down 20 points. The bond market is currently down 1/32 (2.13%), but strength late yesterday should improve this morning’s mortgage rates by approximately .125 of a discount point if comparing to Wednesday’s morning pricing.

We saw strength in bonds late yesterday that caused some lenders to improve rates slightly. A pretty strong 5-year Treasury Note auction likely contributed to some of the improvement but not the sole cause. However, the decent level of investor demand in the 5-year securities helps to be optimistic about today’s 7-year Note sale. Results will be posted at 1:00 PM ET, so any reaction to the auction will come during early afternoon hours. The stronger demand for the securities, the better the chance we will see mortgage rates improve.

This morning’s only economic data was last week’s unemployment figures at 8:30 AM ET. They revealed that 282,000 new claims for unemployment benefits were filed last week. That is up from the previous week’s revised total of 275,000 initial claims and higher than forecasts, hinting at a weakening employment sector. Accordingly, we can consider the data slightly favorable to bonds and mortgage rates, but the fact it is only a weekly snapshot of the sector has prevented the news from influencing today’s rates.

Tomorrow has two reports scheduled for release that may affect mortgage rates. The first is the revision to the 1st quarter Gross Domestic Product (GDP) at 8:30 AM ET. This is the first of two revisions in the GDP 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 0.2% annual rate of growth. Analysts expect a downward revision of 0.9% in this update, equating to economic contraction of 0.7%. 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.

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 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. Tomorrow’s report is expected to show a small upward revision to this month’s preliminary reading of 88.6. A higher reading would be considered bad news for bonds and mortgage pricing while a decline should help boost bond prices and lead to a slight improvement in rates.

Lake Tahoe Mortgage Rate Trends- May 27, 2015

Wednesday’s bond market has opened in negative territory with stocks showing early strength. The major stock indexes are posting fairly strong gains during early trading, pushing the Dow up 93 points and the Nasdaq up 34 points. The bond market is currently down 6/32 (2.16%), but due to gains late yesterday we still may see a slight improvement in this morning’s mortgage rates.

This morning has no relevant economic data to drive bond trading and mortgage rates. It is worth noting though that we appear to be at an important level in the benchmark 10-year Treasury yield. We have seen this yield touch 2.15% and move higher recently. The inability to move below that threshold significantly raises the likelihood that yields may move higher from hear rather than lower. Since mortgage rates tend to follow bond yields, this means higher pricing for mortgage shoppers. On the other hand, breaking below 2.15% allows us to look towards 2.00%. Unfortunately, until that actually happens, I strongly recommend proceeding cautiously if still floating an interest rate and closing in the near future.

The Treasury will auction 5-year Notes today and 7-year Notes tomorrow. 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 additional funds into bonds. The buying of bonds that follows often translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each day, so if we are to get a reaction it will come during early afternoon trading.

Tomorrow’s only economic news will be the weekly unemployment update that is expected to show 272,000 new claims for unemployment benefits were filed last week. That would be a slight decline from the previous week’s 274,000 initial claims, indicating the employment sector strengthened slightly last week. The higher the number of new claims, the better the news it is for bonds and mortgage rates because rising claims indicates a softening employment sector. However, since this is only a weekly snapshot of the sector, it takes a wide variance from forecasts for it to have an impact on mortgage rates.

Lake Tahoe Mortgage Rate Trends- May 26, 2015

Tuesday’s bond market has opened in positive territory despite mostly unfavorable economic news. A weak open in stocks is helping to boost bond prices as the holiday-shortened week kicks off. The Dow is down 149 points while the Nasdaq has lost 48 points. The bond market is currently up 8/32 (2.18%), but due to weakness Friday before closing for the long weekend we likely will see little change in this morning’s mortgage rates.

There were three pieces of economic data released this morning, beginning with April’s Durable Goods Orders at 8:30 AM. The Commerce Department announced that new orders for big-ticket products fell 0.5% last month, nearly matching forecasts of a 0.6% decline. If transportation-related orders such as airplanes are excluded, new orders rose 0.5% when analysts were expecting 0.4%. Both variances are extremely minor in this traditionally volatile data, so its impact on today’s bond trading and mortgage pricing has been fairly minimal.

May’s Consumer Confidence Index (CCI) was released at 10:00 AM this morning, revealing a reading of 95.4 that was higher than analysts’ forecasts of 94.0. This means that surveyed consumers were a little more confident about their own financial and employment situations than expected. Because rising confidence usually means consumers are more apt to make a large purchase in the near future, fueling economic growth, we should consider this news negative for mortgage rates.

April’s New Home Sales report was today’s last piece of relevant data. This Commerce Department report showed sales of newly constructed homes rose 6.8% last month. That was a larger increase than forecasts were calling for, indicating strength in the new home portion of the housing sector. Accordingly, that makes the data negative for bonds and mortgage rates. However, this report is not considered to be highly important to the financial and mortgage markets.

Tomorrow has nothing scheduled for release that is expected to affect mortgage rates but we do have the first of this week’s two Treasury auctions that are worth watching. The Treasury 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, bringing additional 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.

Lake Tahoe Mortgage Rate Trends- May 24, 2015

This holiday-shortened week brings us the release of five relevant economic reports for the markets to digest in addition to a couple Treasury auctions that have the potential to influence bond trading and mortgage rates. None of the reports are considered to be key data, but most 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 0.6%, 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 will 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 94.0, down from April’s 95.2 reading.

The final release of the day is April’s New Home Sales report, also at 10:00 AM ET. It is the sister report of last week’s Existing Home Sales. 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 that report did. 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 strengthened last month.

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 Friday’s revision to the 1st quarter Gross Domestic Product (GDP) at 8:30 AM ET. This is the first of two revisions in the GDP 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 0.2% annual rate of growth. Analysts expect a downward revision of 0.9% in this update, equating to economic contraction of 0.7%. 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.

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 small upward revision to this month’s preliminary reading of 88.6. A higher reading would be considered bad news for bonds and mortgage pricing while a 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 Friday’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. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- May 21, 2015

Thursday’s bond market has opened in positive territory following mixed economic data and another calm open in stocks. The Dow is currently up 2 points while the Nasdaq is up 13 points. The bond market is currently up 13/32 (2.21%), which should improve this morning’s mortgage rates slightly.

Yesterday’s afternoon release of the FOMC minutes did give us some important info that affected bond trading. The minutes gave the indication that the Fed is not likely to make their first rate hike at next month’s FOMC meeting. This wasn’t a complete surprise but it does help eliminate a little more doubt and also allowed bonds to recover ground lost between morning pricing and the 2:00 PM ET release. In other words, they helped prevent some lenders from issuing upward rate revisions.

There were three reports posted this morning with the first coming at 8:30 AM ET when last week’s unemployment figures were released. They revealed that 274,000 new claims for unemployment benefits were filed last week. This was higher than the 270,000 that was expected and an increase from the previous week’s 264,000, making the data good news for bonds and mortgage rates. Unfortunately, this is only a weekly report, so its impact on today’s trading has been minimal.

Next up was April’s Existing Home Sales report from the National Association of Realtors at 10:00 AM ET. They announced a 3.3% decline in home resales last month when analysts were expecting to see an increase. This means that the largest portion of the housing sector was softer than many had thought. Therefore, we can consider the data slightly positive for mortgage rates.

April’s Leading Economic Indicators (LEI) was the last report of the morning, also at 10:00 AM ET. The Conference Board said their LEI index rose 0.7% for April, exceeding forecasts of a 0.3% increase. Because the index attempts to predict economic activity over the next several months, the stronger than expected increase makes the data bad news for bonds and mortgage pricing.

Tomorrow has just April’s Consumer Price Index (CPI) at 8:30 AM ET, but it is the most important economic report of the week. This is the sister report of last week’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 significant surprises. Current forecasts are calling for a 0.1% increase in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two readings as it excludes more volatile food and energy prices. This data can also affect the Fed’s timeline for raising key short-term interest rates and will also help dictate mortgage rate direction.

Also worth noting about tomorrow is a speaking engagement by Fed Chair Janet Yellen at 1:00 PM ET. She will be speaking in Rhode Island and the topic is related to economic activity, so her words could cause volatility in the markets if she says anything surprising. Furthermore, the bond market will close at 2:00 PM ET tomorrow ahead of the Memorial Day weekend while stocks are open for a full day.

Lake Tahoe Mortgage Rate Trends- May 22, 2015

Friday’s bond market has opened in negative territory following slightly stronger than expected inflation news. Stocks are mixed but relatively calm during early trading with the Dow down 11 points and the Nasdaq up 11 points. The bond market is currently down 5/32 (2.21%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point over Thursday’s early pricing. We did see some late strength in bonds yesterday, but I believe we will still see a small increase in today’s rates.

Today’s only relevant economic data was a key consumer inflation reading at 8:30 AM ET. April’s Consumer Price Index (CPI) revealed a 0.1% increase in the overall reading, matching forecasts. The slightly negative news came in the core data that showed a 0.3% rise, exceeding forecasts of a 0.2% increase. This means that inflationary pressures excluding food and energy prices, rose more than expected. Since rising inflation makes bonds less attractive to investors and allows the Fed to raise short-term rates sooner, we should consider this morning’s data bad news for mortgage shoppers.

Fed Chair Janet Yellen will be speaking in Rhode Island at 1:00 PM ET today. The topic of her speech is related to economic activity, so her words could cause volatility in the markets if she says anything surprising. Furthermore, the bond market will close at 2:00 PM ET day ahead of the Memorial Day weekend and reopen Tuesday morning. Stocks are open for a full day today but will be closed Monday also.

Next week has a handful of relevant economic reports along with a couple of potentially influential Treasury auctions. Some of the data is scheduled for Tuesday morning when the markets reopen. Look for details on those and all of next week’s schedule in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- May 20, 2015

Wednesday’s bond market has opened in positive territory despite a lack of factual economic data this morning. The stock markets are calm again with the Dow up 10 points and the Nasdaq nearly unchanged. The bond market is currently up 6/32 (2.27%), but due to weakness late yesterday, we likely will see little change in this morning’s mortgage rates if comparing to Tuesday’s morning pricing.

There is no relevant economic data being released today, but the markets are waiting for this afternoon’s release of the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation or concerns about economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates, which is expected to happen sometime this year. 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.

Tomorrow has three reports being posted. The first will be at 8:30 AM when we will get last week’s unemployment update. This is when we will see last week’s unemployment filings. It is expected to show that 270,000 new claims for benefits were filed last week, up from the previous week’s 264,000 initial claims. Rising claims are an indication of a softening employment sector, so the higher the number of new claims the better the news it is for mortgage rates.

The National Association of Realtors will give us their Existing Home Sales report at 10:00 AM ET tomorrow 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 a small 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 slight increase in mortgage rates Thursday morning since a strengthening housing sector raises optimism about general economic growth.

Lastly, April’s Leading Economic Indicators (LEI) will also be released at 10:00 AM ET. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.3% 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 tomorrow.

Lake Tahoe Mortgage Rate Trends- May 19, 2015

Tuesday’s bond market has opened in negative territory following some surprisingly strong housing news. The stock markets are relatively calm with the Dow up 14 points and the Nasdaq nearly unchanged from yesterday’s close. The bond market is currently down 11/32 (2.27%), which should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point over Monday’s morning pricing.

Today’s only data was April’s Housing Starts that showed a 20.2% spike in new home construction groundbreakings. That jump brought starts to their strongest level since November 2007, indicating solid strength in the new home portion of the housing sector. The increase was much stronger than analysts were expecting, so the data is clearly negative for the bond and mortgage markets.

There is nothing scheduled for release tomorrow morning that is likely to affect mortgage rates. However, we do have the minutes of the last FOMC meeting being released tomorrow afternoon. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation or concerns about economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates, which is expected to happen sometime this year. 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.

It is worth reminding that we have an early close in the bond market Friday ahead of the Memorial Day holiday Monday. That early close follows a key inflation reading Friday morning. With none of Thursday’s releases considered to be highly important, I would not be surprised to see a fairly active bond market as we head towards the end of the week as traders look to protect themselves over the long weekend. This raises the possibility of seeing intraday revisions to mortgage rates the next couple days.

Lake Tahoe Mortgage Rate Trends- May 18, 2015

Monday’s bond market has opened in negative territory, giving back some of the rally from late last week. Stocks are starting the week calm with the Dow up 7 points and the Nasdaq down 2 points. The bond market is currently down 15/32 (2.20%), but due to strength late Friday we should see an increase in this morning’s mortgage rates of only approximately .125 of a discount point.

There is nothing of importance scheduled for release today. The rest of the week brings us the release of four pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting. Only one of the economic reports is considered to be highly important to the markets and mortgage rates, but a couple do carry enough significance to influence mortgage rates if they show a wide variance from forecasts.

April’s Housing Starts will kick-off the week’s calendar early tomorrow morning. It will give 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.

Overall, I believe Friday will be the most important day for rates, not just due to the CPI release, but also because it will be a shortened trading day ahead of the Memorial Day holiday. Wednesday afternoon could also be pretty active if the minutes show anything of importance. Despite a relatively light calendar, I still recommend maintaining contact with your mortgage professional if you have not locked an interest rate yet as recent trading shows we don’t need key data for the bond market and mortgage rates to turn volatile.

Lake Tahoe Mortgage Rate Trends- May 17, 2015

This week brings us the release of four pieces of relevant economic news in addition to the minutes from the most recent FOMC meeting. Only one of the economic reports is considered to be highly important to the markets and mortgage rates, but a couple do carry enough significance to influence mortgage rates if they show a wide variance from forecasts. Tomorrow has nothing of importance scheduled, so look for stock movement and overseas bond momentum to heavily influence our bond trading and mortgage rates.

April’s Housing Starts will kick-off the week’s calendar early Tuesday morning. It will give 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.

The next 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 concerns about economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates, which is expected to happen sometime this year. 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 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 a small 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 slight 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 0.3% 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.

Friday has just April’s Consumer Price Index (CPI) at 8:30 AM ET, but it is the most important economic report of the week. This is the sister report of last week’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 significant surprises. Current forecasts are calling for a 0.1% increase in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two readings as it excludes more volatile food and energy prices. This data can also affect the Fed’s timeline for raising key short-term interest rates and will also help dictate mortgage rate direction.

Overall, I believe Friday will be the most important day for rates, not just due to the CPI release, but also because it will be a shortened trading day ahead of the Memorial Day holiday. Wednesday afternoon could also be pretty active if the minutes show anything of importance. The calmest day will likely be tomorrow or Tuesday. Despite a relatively light calendar, I still recommend maintaining contact with your mortgage professional if you have not locked an interest rate yet as recent trading shows we don’t need key data for the bond market and mortgage rates to turn volatile.