Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Mortgage Rate Trends-July 18, 2014

Friday’s bond market has opened fairly flat despite weaker than predicted economic news. The stock markets are showing minor gains with the Dow up 49 points and the Nasdaq up 28 points. The bond market is currently almost unchanged from yesterday’s close at 2.47% but you may still see a slight increase in rates if your lender improved yesterday afternoon.

We saw a big move in bonds late yesterday as geopolitical events took center stage. The airliner that was shot down over Ukraine and the Israel/Gaza crisis both contributed to an investor flight-to-safety late yesterday that drove stock prices lower and bond prices higher. This is where investors move funds from the volatility of stocks into bonds that tend to thrive during global turmoil. The result was a fairly wide range of lenders making an intraday improvement to mortgage rates. While that is welcomed news for mortgage shoppers, it should be taken cautiously as these flight-to-safety rallies almost always reverse course when the crisis appears to have stabilized or at least stops escalating. In other words, it is not an event that usually starts a downward trend in rates. It is more or less a temporary event that eventually corrects itself.

There were two pieces of economic data posted late this morning. The first was the University of Michigan’s Index of Consumer Sentiment for July just before 10:00 AM ET. They announced a reading of 81.3 that was a decline from June’s 82.5 reading and much lower than analysts were expecting. This means surveyed consumers were less confident of their own financial and employment situations than many had thought and will likely delay making a large purchase in the near future. That makes the data favorable for the bond market and mortgage rates.

Also released was June’s Leading Economic Indicators (LEI) that showed a 0.3% increase. This was also softer than forecasts were calling for and hints that economy may grow over the next several months but at a little slower pace than previously expected. Therefore, we should also consider this data good news for mortgage rates. However, this data is not important enough to cause much of a move in the financial or mortgage markets.

Next week is not as busy as this week was but still has a couple of economic reports scheduled that can influence the bond market and mortgage rates. None of the data is set for release Monday, allowing the weekend’s geopolitical events (or stabilization) to drive market trading.