Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Mortgage Rate Trends- August 3, 2015

Monday’s bond market has opened in positive territory following weaker than expected economic data. The major stock indexes are mixed with the Dow down 41 points and the Nasdaq up 3 points. The bond market is currently up 4/32 (2.17%), which with some strength late Friday should improve this morning’s mortgage rates by approximately .125 of a discount point.

This morning had two relevant economic reports released. June’s Personal Income and Outlays data came at 8:30 AM ET, revealing a 0.4% increase in income and a 0.2% rise in spending. The income reading was slightly higher than the 0.3% that was forecasted but the spending increase matched expectations. Because consumer spending makes up such a large portion of our economy and bonds prefer to see weaker economic conditions, we should consider this report neutral-to-slightly negative for rates.

The second report of the day came from the Institute for Supply Management (ISM) who announced their manufacturing index slipped from 53.5 in June to 52.7 in July. This is good news for mortgage shoppers because this is considered to be a major release and shows weaker than expected economic conditions. The decline means fewer surveyed manufacturing executives felt business improved last month than did in June. A reading above 50 means more felt conditions improved than said they had worsened, but the lower reading makes the data favorable for bonds and mortgage rates. This data was supposed to be released just before 10:00 AM ET, however it was leaked and hit the wires around 9:15 AM ET.

Tomorrow has one piece of data worth watching in June’s Factory Orders data. It will be released at 10:00 AM ET tomorrow, but is the week’s least important monthly report. This data helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to last week’s Durable Goods Orders report that tracks orders for big-ticket items only. Since a significant portion of the data was released last week, this report likely will not have a big impact on the markets. Analysts are expecting to see an increase in new orders of approximately 1.8%. A smaller than expected increase would be considered good news for bonds and mortgage pricing, but it will take a large variance from forecasts for this report to heavily influence tomorrow’s mortgage rates.

Overall, I am expecting Friday to be the most active days for mortgage rates. The middle days should be calmer and Thursday appears to be the best candidate for least active day. Besides the data we should also watch the major stock indexes for bond and mortgage rates direction. Sizable stock gains should pressure bonds and mortgage pricing. However, if stocks go into selling mode, conditions are right for bonds to benefit, driving mortgage rates lower.

Lake Tahoe Mortgage Rate Trends- August 2, 2015

This week brings us the release of five pieces of economic data that are worth watching. The most important ones are early and late in the week, so we should see the most movement those days. Because the data is spread throughout the week, we could see noticeable changes to rates multiple days.

June’s Personal Income and Outlays data will kick off the week at 8:30 AM ET tomorrow morning. This report helps us measure consumer ability to spend and current spending habits. If it shows sizable increases, bond selling could lead to higher mortgage rates. Current forecasts are calling for an increase of 0.3% in income and a 0.2% rise in spending. A larger than expected increase in income means consumers have more funds to spend, which is not favorable to bonds because consumer spending makes up over two-thirds of the U.S. economy. Ideally, we would like to see declines in spending and income, but the smaller the increase in each, the better the news for mortgage rates.

The Institute for Supply Management (ISM) will release their manufacturing index for July late tomorrow morning. This index measures manufacturer sentiment by surveying trade executives about business conditions during the month and is considered to be of high importance to the markets. A reading above 50.0 means that more surveyed executives felt that business improved last month than those who said it had worsened. Analysts are expecting to see a slight change from June’s 53.5. Forecasts are calling for a reading of 53.7, meaning manufacturer sentiment improved slightly last month. That would be neutral news for bonds and mortgage rates. If we see a much smaller reading, we can expect the bond market to rally and mortgage rates to drop tomorrow. On the other hand, a larger increase could lead to higher rates to start the week.

June’s Factory Orders data is Tuesday’s only relevant monthly data, coming at 10:00 AM ET. It helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to last week’s Durable Goods Orders report that tracks orders for big-ticket items only. Since a significant portion of the data was released last week, this report likely will not have a big impact on the markets. Analysts are expecting to see an increase in new orders of approximately 1.8%. A smaller than expected increase would be considered good news for bonds and mortgage pricing, but it will take a large variance from forecasts for this report to heavily influence Tuesday’s mortgage rates.

The ADP Employment report will be released before the markets open Wednesday, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs in the company’s clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week’s calendar. Forecasts show an increase of 220,000 new payrolls. The lower the number, the better the news it is for mortgage rates.

Thursday has no monthly or quarterly data scheduled, but the week’s calendar closes with the almighty monthly Employment report early Friday morning. This report gives us the U.S. unemployment rate, number of jobs added or lost during the month and average hourly earnings for July. The best scenario for the bond market is rising unemployment, a sizable loss of jobs and little change in earnings. While many believe the preliminary reading to the GDP is the single most important report in general, it is posted quarterly rather than monthly like the Employment report. Friday’s report is expected to show that the unemployment rate remained at 5.3% last month while approximately 227,000 jobs were added to the economy. Due to the importance of these readings, we will most likely see quite a bit of volatility in the markets and mortgage pricing Friday morning following their 8:30 AM ET posting.

Overall, I am expecting Friday or tomorrow to be the most active days for mortgage rates. The middle days should be calmer and Thursday appears to be the best candidate for least active day. Besides the data we should also watch the major stock indexes for bond and mortgage rates direction. Sizable stock gains should pressure bonds and mortgage pricing. However, if stocks go into selling mode, conditions are right for bonds to benefit, driving mortgage rates lower.

Lake Tahoe Mortgage Rate Trends- July 31, 2015

Friday’s bond market has opened in positive territory following weaker than expected economic news. The major stock indexes are mixed with the Dow down 10 points and the Nasdaq up 15 points. The bond market is currently up 16/32 (2.28%), which should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.

Neither of this morning’s two relevant economic releases were considered to be highly important, but both gave us favorable results and have helped to boost bond prices during early trading. At 8:30 AM ET, the 2nd Quarter Employment Cost Index (ECI) was released, showing a 0.2% rise compared to forecasts of a 0.6% increase. This means employer costs for wages and benefits rose much less than many had thought during the April to June quarter. Because rising wages and wage inflation can spread to other parts of the economy, it is looked upon negatively in the bond market. The softer reading makes the data good news for bonds and mortgage rates.

July’s University of Michigan Index of Consumer Sentiment was posted just before 10:00 AM ET. It came in at 93.1, falling short of the 94.0 that was expected. This was also a slight decline from the initial reading of 93.3 that was announced two weeks ago, indicating that consumer confidence in their own financial situations dipped or remained flat instead of improving like analysts were expecting. Since rising confidence usually means consumers are willing to spend more, we can consider this data slightly favorable for mortgage rates.

Next week is pretty busy with important monthly data being released four of five days. Two reports are considered highly important to the markets, including the almighty monthly Employment report next Friday. There are two releases set for Monday, one of which is the week’s other key report (July’s ISM index). Look for an active Monday to start the week with the Personal Income and Outlays report and ISM index both coming during morning hours. We will address these reports and the rest of the week’s activities in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- July 30, 2015

Thursday’s bond market has opened relatively flat even though the major economic release gave us somewhat favorable results. Stocks are showing fairly minor losses with the Dow down 50 points and the Nasdaq down 16 points. The bond market is up 1/32 (2.28%), which should keep this morning’s mortgage rates at yesterday’s early levels.

This morning had two pieces of economic data for the markets to digest. The first and more important one was the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It showed a 2.3% increase in the GDP from April through June that was a little softer than expectations. The data shows that the economy rebounded from a weak first quarter but at a slower pace than many had thought. Most forecasts were calling for an increase of 2.5% or higher. It appears that the markets weren’t overly impressed or concerned with the news as both stocks and bonds have shown minimal reaction. Still, we can consider the reading slightly favorable for bonds and mortgage rates.

The second report of the morning was last week’s unemployment figures that showed 267,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week’s 255,000 initial claims but was not as high as the 272,000 that was predicted. The good news is that the data indicates the employment sector weakened slightly last month. The not so good news is that it was still stronger than analysts thought. Therefore, we can consider the data neutral for mortgage rates.

There is a 7-year Treasury Note auction taking place today that may have a small impact on this afternoon’s mortgage rates. If the sale was met with a strong demand from investors, we could see the broader bond market improve enough to lead to a slight downward revision to mortgage rates. However, a weak interest in the securities could lead to a slight increase. Results of the sale will be posted at 1:00 PM ET, so any reaction will come during afternoon hours.

Tomorrow closes the week with two pieces of economic data that are sort of worth watching. The 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits is the first, coming at 8:30 AM ET. This gives us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. That would cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.6%.

And July’s University of Michigan Index of Consumer Sentiment just before 10:00 AM ET will wrap up the week’s activities. It will help us measure consumer optimism about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending that adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 93.3, I think the markets will probably shrug off this news.

Lake Tahoe Mortgage Rate Trends- July 29, 2015

WEDNESDAY AFTERNOON UPDATE:
This week’s FOMC meeting has adjourned with no change to key short-term interest rates. That was widely expected from market participants. The post-meeting statement didn’t give us any significant surprises. Key points indicated that the labor market continues to improve as does the housing market and that inflation remains below their preferred rate of 2.0% annually.

The statement did little to affect predictions of when the Fed will make their first increase to key rates. Many still believe that it will come at either the next FOMC meeting in mid-September or the late October meeting. The markets aren’t far off from their earlier levels with stocks and bonds showing slight improvement. The Dow is currently up 110 points while the Nasdaq is up 19 points. The bond market is now down only 3/32 (2.27%), which may be enough of a move for some lenders to improve rates by .125 of a discount point from this morning’s pricing. However, I suspect most lenders will wait for tomorrow’s major data before reflecting this change.

Today’s 5-year Treasury Note auction went fairly well with several benchmarks we use to gauge investor demand showing a decent level of interest. That helps us to be optimistic about tomorrow’s 7-year Note auction. Since its results will not be followed by a major event such as today’s FOMC meeting, a strong demand for that sale could lead to a slight afternoon improvement in rates tomorrow.

Tomorrow morning’s major data is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This index is considered to be the benchmark indicator of economic growth or weakness. It is the total of all goods and services that are produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important report we get regularly. Current forecasts are estimating that the economy grew at a 2.5% annual rate during the second quarter, rebounding significantly from the first quarter’s 0.2% decline. A faster rate of growth should hurt bond prices, leading to higher mortgage rates. But a smaller than expected reading will likely fuel a bond market rally and push mortgage pricing lower since it would indicate the economy was not as strong as many had thought.

Also tomorrow morning will be last week’s unemployment figures. They are expected to show that 272,000 new claims for unemployment benefits were filed last week. This would be a good sized increase from the previous week’s 255,000, hinting at employment sector weakness. Since this report will be posted at the same time as the GDP and it is only a weekly snapshot, I would be surprised if it affected tomorrow’s mortgage rates.

Lake Tahoe Mortgage Rate Trends- July 29, 2015

Wednesday’s bond market has opened in negative territory again as investors get antsy about today’s Fed event. The stock markets apparently are not as concerned about it with the Dow up 88 points and the Nasdaq up 11 points. The bond market is currently down 11/32 (2.29%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

Today’s only relevant events take place this afternoon and they are not economic reports. The first is the 5-year Treasury Note auction. This sale will not directly impact mortgage pricing, but can influence general bond market sentiment. If sales such as this go poorly, we sometimes 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 the bond market. The buying of bonds that follows translates into lower mortgage rates. Results will be posted at 1:00 PM ET, so look for any reaction to come during early afternoon hours.

Next up is the adjournment of the fifth FOMC meeting of the year that actually began yesterday. This is not a meeting that will be followed by a press conference with Fed Chair Yellen nor is it expected to yield a change to key interest rates. Many analysts believe the Fed will make their first increase to key short-term interest rates at the September FOMC meeting. Anything in the post-meeting statement that either confirms or contradicts that theory will cause volatility in the markets. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon hours.

I am expecting some volatility this afternoon, so we will be updating this report shortly after the markets have had an opportunity to react to the FOMC statement. There is highly important data set for release tomorrow morning (GDP) but it will be addressed in this afternoon’s revision.

Lake Tahoe Mortgage Rate Trends- July 28, 2015

Tuesday’s bond market has opened in negative territory even thought this morning’s only economic news gave us favorable results. The stock markets are mixed with the Dow up 26 points and the Nasdaq down 6 points. The bond market is currently down 13/32 (2.26%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

The Conference Board gave us July’s Consumer Confidence Index (CCI) at 10:00 AM ET this morning. They announced a reading of 90.9 that fell well short of expectations and was a sizable drop from June’s revised 99.8. Analysts were expecting to see a decline from June but forecasts were for a much smaller drop. This means that surveyed consumers were less optimistic about their own financial and employment situations than many had thought. Because waning confidence usually translates into softer consumer spending that drives economic growth, we can consider this data good news for bonds and mortgage rates. Unfortunately, this is only a moderately important report, so its impact on today’s trading and mortgage pricing has been restricted.

Tomorrow has no relevant economic data but does have two afternoon events that may affect mortgage rates. The first is the 5-year Treasury Note auction. This sale will not directly impact mortgage pricing, but can influence general bond market sentiment. If sales such as this go poorly, we sometimes 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 the bond market. The buying of bonds that follows translates into lower mortgage rates. Results will be posted at 1:00 PM ET tomorrow, so look for any reaction to come during early afternoon hours.

Next up is the adjournment of the fifth FOMC meeting of the year that began today. This is not a meeting that will be followed by a press conference with Fed Chair Yellen nor is it expected to yield a change to key interest rates. Many analysts believe the Fed will make their first increase to key short-term interest rates at the September FOMC meeting. Anything in the post-meeting statement that either confirms or contradicts that theory will cause volatility in the markets. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon hours.

Lake Tahoe Mortgage Rate Trends- July 27, 2015

Monday’s bond market has opened in positive territory despite stronger than expected economic news. The stock markets are starting the week with sizable losses of 99 points in the Dow and 24 points in the Nasdaq. The bond market is currently up 8/32 (2.23%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

June’s Durable Goods Orders report was posted early this morning by the Commerce Department. They announced a 3.4% increase in new orders for big-ticket items that was a little stronger than the 3.0% increase that was predicted. A secondary reading that excludes more pricey and volatile transportation-related orders such as airplanes showed similar results (+0.8% vs +0.5% forecast). This data indicates that the manufacturing sector was a little stronger than thought last month, making the data slightly negative for bonds and mortgage rates. However, this data is known to be quite volatile, so the variances in this morning’s report were not considered significant and helped to minimize its impact on today’s rates.

The rest of the week brings us the release of four more economic reports that may impact mortgage rates, one of which is considered to be highly influential. In addition to the economic data, there is also another FOMC meeting that certainly has the potential to cause chaos in the markets and a couple of Treasury auctions mid-week. With data or relevant events scheduled every day, there is a strong likelihood of seeing noticeable mortgage rate movement and possible intra-day revisions more than once this week.

Tomorrow’s sole data is July’s Consumer Confidence Index (CCI) from the Conference Board. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, they are apt to make large purchases in the near future. This is important because consumer spending makes up such a large portion of our economy. If the CCI reading is weaker than expected, meaning that consumers were less confident than thought and likely will delay making a large personal purchase, we may see bond prices rise and mortgage rates drop tomorrow morning. Current forecasts are calling for a reading of 100.0 which would be a weaker reading than June’s 101.4 and indicate consumers are a little less comfortable with their finances than they were last month.

Overall, Wednesday is the most important day of the week due to the FOMC meeting results, but Thursday’s GDP posting is highly important to the markets. I suspect we will see a more active week for mortgage rates than we saw last week, so please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- July 26, 2015

This week brings us the release of five economic reports that may impact mortgage rates, one of which is considered to be highly influential. In addition to the economic data, there is also another FOMC meeting that certainly has the potential to cause chaos in the markets and a couple of Treasury auctions mid-week. There is at least one event set for every day, so there is a strong likelihood of seeing noticeable mortgage rate movement and possibly multiple intra-day revisions this week.

The Commerce Department will start the week’s calendar by posting June’s Durable Goods Orders at 8:30 AM ET tomorrow. Current forecasts are currently calling for an increase in new orders of 3.0% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. A much stronger than expected number may lead to higher mortgage rates tomorrow morning because it would point towards economic strength. If it reveals a large decline in new orders, mortgage rates should move lower. It should be noted though that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move the markets or mortgage rates.

Late Tuesday morning the Conference Board will release their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, they are apt to make large purchases in the near future. This is important because consumer spending makes up such a large portion of our economy. If the CCI reading is weaker than expected, meaning that consumers were less confident than thought and likely will delay making a large personal purchase, we may see bond prices rise and mortgage rates drop Tuesday morning. Current forecasts are calling for a reading of 100.0 which would be a weaker reading than June’s 101.4 and indicate consumers are a little less comfortable with their finances than they were last month.

Wednesday has no relevant economic data but does have two afternoon events. The first is the adjournment of the fifth FOMC meeting of the year that begins Tuesday. This is not a meeting that will be followed by a press conference with Fed Chair Yellen nor is it expected to yield a change to key interest rates. Many analysts believe the Fed will make their first increase to key short-term interest rates at the September FOMC meeting. Anything in the post-meeting statement that either confirms or contradicts that theory will cause volatility in the markets. The meeting will adjourn at 2:00 PM ET, so any reaction will come during mid-afternoon hours.

There are two Treasury auctions that are worth watching this week. 5-year Notes will be sold 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 the bond market. The buying of bonds that follows 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 key data of the week is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET Thursday. This index is considered to be the benchmark indicator of economic growth or weakness. It is the total of all goods and services that are produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important report we get regularly. Current forecasts are estimating that the economy grew at a 2.6% annual rate during the second quarter, rebounding significantly from the first quarter’s 0.2% decline. A faster rate of growth should hurt bond prices, leading to higher mortgage rates Thursday. But a smaller than expected reading will likely fuel a bond market rally and push mortgage pricing lower since it would indicate the economy was not as strong as many had thought.

Friday has two moderately important reports scheduled for release. The 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits is the first, coming at 8:30 AM ET. This gives us a measurement of wage-inflation. If it shows a large increase, we may see wage inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. That would cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.6%.

Next is July’s University of Michigan Index of Consumer Sentiment just before 10:00 AM ET that will help us measure consumer optimism about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending that adds fuel to the economic recovery and is looked at as bad news for bonds. Friday’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 93.3, I think the markets will probably shrug off this news.

Overall, Wednesday is the most important day of the week due to the FOMC meeting results, but Thursday’s GDP posting is highly important to the markets. Tomorrow’s Durable Goods Orders can also cause some movement in rates though. I suspect we will see a more active week for mortgage rates than we saw last week, so please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- July 24, 2015

Friday’s bond market has opened flat again even though we got favorable results from this morning’s only economic data. Stocks are showing minor losses with the Dow down 32 points and the Nasdaq down 8 points. The bond market is currently down 1/32 (2.27%), but due to strength late yesterday we should still see an improvement in this morning’s mortgage rates of approximately .125 of a discount point if comparing to Thursday’s morning pricing.

June’s New Home Sales data was released late this morning, revealing a 6.7% decline in sales of newly constructed homes. This was well off of forecasts that were calling for a small increase in sales. The decline indicates the new home portion of the housing sector was softer than many had thought, making the data good news for bonds and mortgage rates.

Next week is going to be much more active than this week was. There are more economic reports being posted and the data is considered to be of higher importance than we had this week. In addition to the economic news, there will also be a couple of Treasury auctions and another FOMC meeting for the markets to digest.

Monday does have something scheduled to start the week. June’s Durable Goods Orders report will be posted early Monday morning, giving us an important measurement of manufacturing sector strength. We will address this report and all of next week’s activities in Sunday evening’s weekly preview.