Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Mortgage Rate Trends- April 29, 2016

Friday’s bond market has opened in negative territory despite sizable stock losses. The major stock indexes appear ready to close the week on a negative note, pushing the Dow lower by 119 points and the Nasdaq down 31 points. The bond market is currently down 5/32 (1.84%), but due to strength late yesterday we should see this morning’s mortgage rates improve slightly.

Yesterday’s 7-year Treasury Note auction went well with several benchmarks showing a strong level of interest in the securities. That likely contributed to yesterday’s afternoon strength in the broader bond market that also led to some lenders improving rates intraday. If your lender did revise rates lower yesterday afternoon, you probably are seeing a small increase this morning. However, the net difference should have this morning’s rates slightly better than yesterday’s morning pricing.

The first of this morning’s three economic reports was March’s Personal Income and Outlays data at 8:30 AM ET. It revealed a 0.4% increase in income and a 0.1% rise in spending. The income reading was slightly higher than forecasts while the spending number was just a bit softer than what analysts were calling for. Rising income gives consumers more money to spend, but the weaker than predicted income reading means they did not spend as much. These results are mixed in terms of what they mean for bond pricing and mortgage rates. Therefore, I am giving it a neutral label as they technically offset each other.

Next up was the 1st Quarter Employment Cost Index (ECI), also at 8:30 AM ET. This index showed a 0.6% increase, matching expectations. The increase means employers paid more for employee wages and benefits than they did in the 4th quarter of last year. However, this is not considered to be a highly important release and since it pegged forecasts it has not had an impact on this morning’s bond trading or mortgage pricing.

The final report of the day came from the University of Michigan’ late this morning. They posted their revised Index of Consumer Sentiment for April, announcing a reading of 89.0 that fell short of the 90.0 that was expected. This was also a decline from the previous estimate of 89.7, indicating surveyed consumers were not as optimistic about their own financial situations as was thought earlier in the month. That bodes well for bonds and mortgage pricing because waning confidence usually translates into weaker levels of consumer spending and economic growth.

Next week does not have a large number of reports scheduled for release but most of what is being posted is considered to be highly influential on the bond and mortgage markets. One of the key releases comes Monday when the Institute for Supply Management (ISM) posted their manufacturing index for April. This report usually has a noticeable impact on the financial and mortgage markets. Look for details on it and the rest of the week’s schedule in Sunday evening’s weekly preview.