Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Mortgage Rate Trends- July 16, 2015

Thursday’s bond market has opened in negative territory again as Greece’s bailout agreement appears to have cleared a major hurdle. The stock markets are in positive territory, pushing the Dow higher by 34 points and the Nasdaq up 40 points. The bond market is currently down 6/32 (2.37%), but we will likely see little change in this morning’s rates if comparing to Wednesday’s early pricing due to strength during afternoon trading.

We saw some strength in bonds late yesterday that led to many lenders improving rates by approximately .125 of a discount point. This morning’s bond losses will give back some of that improvement. The Fed Beige Book was posted yesterday afternoon, but it was not the reason for the improvement in bonds. It showed that economic activity grew at a modest to moderate pace in the Federal Reserve Bank regions since the last update. This did not come as a surprise, so it had little influence on yesterday’s mortgage rates.

Today’s only relevant economic data was last week’s unemployment figures that showed 281,000 new claims for unemployment benefits were filed last week. This was a sizable decline from the previous week’s revised total of 296,000 initial claims, indicating the employment sector strengthened last week. However, this was close to the 283,000 that was expected and it is only a weekly report, so its impact on today’s bond trading and mortgage rates has not been noticeable.

Fed Chair Janet Yellen is speaking before the Senate Banking Committee this morning. I don’t believe we will hear anything new unless it comes in the Question and Answer portion of the proceedings. My best guess is that today’s appearance will be a non-factor for mortgage rates.

Tomorrow looks to be a fairly active day with three pieces of economic data scheduled for release. The first comes at 8:30 AM ET when June’s Consumer Price Index (CPI) is posted. This is a mirror of PPI we got Wednesday with the exception that this report measures inflation at the more important consumer level of the economy. Analysts have forecasted a 0.3% increase in the overall index and a 0.2% rise in the core data. Higher than expected readings could raise future inflation fears and push mortgage rates higher, while readings that fall short of forecasts should lead to lower rates early tomorrow.

Also at 8:30 AM ET tomorrow will be the release of June’s Housing Starts report. This data gives us an indication of housing sector strength by tracking construction starts of new homes, but is not considered to be of high importance. Analysts are currently expecting to see an increase in new starts. However, I don’t see this data having much of an impact on mortgage rates unless it varies greatly from forecasts.

The final report of the week will be the University of Michigan’s Index of Consumer Sentiment just before 10:00 AM ET. This index is released in a preliminary form each month and then followed up two weeks later with a final reading. The preliminary reading for July will be posted tomorrow and is expected to rise from June’s final reading of 96.1. This would indicate that consumers were a little more comfortable with their own financial and employment situations this month than last month. It is believed that if consumer confidence in their own finances is rising, they are more apt to make a large purchase in the near future. And with consumer spending making up such a large part of our economy, investors pay close attention to reports such as these. So, a decline in confidence would be good news for mortgage rates because it means many consumers will probably delay making a large purchase in the immediate future, limiting economic activity. Forecasts are calling for a reading of 96.5. The lower the reading, the better the news for bonds and mortgage rates.