Dallas Morning News articles: DFW Rents see record rise in 2011 / Home Mortgage Outlook for 2012

Couple great articles to share with your "on the fence" clients:

Here are 2 articles in Dallas Morning News Briefing on January 6th 2012:

D-FW rents see record rise in 2011-

North Texas apartment renters paid almost 5 percent more in 2011, the biggest annual increase on record.
At the end of 2011, DFW apartment rents averaged a record $804 a month, the Carrollton-based apartment analyst said Thursday. And most new North Texas rental units start above $1,000.
~DMN

Home mortgage outlook:

Fran Nothaft, chief economist at mortgage giant Freddie Mac, is predicting that residential mortgage rates will be "relatively low during the first half of the year, with rates edging up during the second half."
This week, nationwide rates for 30-year fixed home loans were a record low 3.91 percent.
That means the payment on a $200,000 mortgage is less than $950 (principle and interest) a month. Most new apartments in the Dallas area will run you more than that.
~DMN

Night Before Christmas [Short Film]

Two eager children wake the night before Christmas to discover the presents have already arrived.

Mortgage Market Update

Thursday’s bond market has opened in negative territory following the release of stronger than expected economic data. The stock markets are in positive territory with the Dow up 121 points and the Nasdaq up 18 points. The bond market is currently down 8/32, but due to strength late yesterday, we may not see much of a change in this morning’s mortgage rates. Some lenders may have revised pricing slightly lower yesterday afternoon, but today’s early weakness simply offsets that improvement.

There were three economic reports released this morning. The most important was November's Producer Price Index (PPI) that revealed a 0.3% increase in the overall reading and a 0.1% rise in the core data. This data measures inflationary pressures at the producer level of the economy and is considered to be important to the markets. The rise in the overall reading exceeded expectations of 0.1%, but the more important core reading pegged forecasts. The core data is watched more closely because it excludes food and energy prices that are known to be much more volatile month-to-month. Therefore, the data should be considered neutral-to-slightly negative for bonds and mortgage rates.

The Labor Department also gave us last week’s unemployment figures early this morning. They surprised many with an announcement that the number of new claims filed for unemployment benefits fell to 366,000 last week. This much lower than expected and was the lowest number since May 2008. This is clearly negative news for the bond market and mortgage rates because it points towards a strengthening employment sector. Fortunately though, this is only a weekly snapshot of the sector, or we could have seen a large sell-off in bonds and a spike in mortgage rates. Because this report tracks only a single week’s worth of new claims, its impact on this morning’s trading and mortgage pricing has been somewhat subdued.

The third and final report of the day was November's Industrial Production data at 9:15 AM ET. It gave us a bit of good news by showing a 0.2% decline in output at U.S. factories, mines and utilities last month. This was short of the 0.2% increase that was expected, meaning the manufacturing sector may not have been as strong last month as many had thought. Since that hints at economic weakness, it can be considered good news for the bond market and mortgage rates.

Tomorrow has just one relevant economic report scheduled for release, but it is one of the most important pieces of data the bond market sees each month. November's Consumer Price Index (CPI) will be released at 8:30 AM ET. This is the sister report to today’s PPI, but measures inflationary pressures at the more important consumer level of the economy. Inflation readings are highly relevant to the bond market and long-term securities such as mortgage-related bonds because inflation is their number one nemesis. Rising inflation erodes the value of a bond’s future fixed interest payments, particularly several years down the road. This causes bonds to become less appealing to investors and leads to the securities being sold at a discount to offset the effect inflation has on them. As bond prices fall, their yields move higher. And since mortgage rates tend to follow bond yields, the end result is higher mortgage rates to consumers.

As with today’s PPI, there are two readings to the release. The core data reading is more important to the markets than the overall reading because it gives us a more stable measurement of inflation at the consumer level of the economy. Analysts are expecting to see a 0.1% increase in both readings, meaning inflationary pressures rose slightly last month. That would be considered favorable news for the bond market, but a decline would be better. As long as we don’t get much stronger than forecasted readings, especially in the core data, the bond market should respond positively to the news.

First Time Homebuyer Assistance Program

Down Payment and Closing Cost Assistance Program for First Time Homebuyers

Begin a lifetime of homeownership through the Texas First Time Homebuyer Program (FTHB). This program allows qualified Texans access to down payment and closing cost assistance. Homebuyers who have not owned a home within the past three years, who meet program income guidelines and who do not exceed the program's purchase price limits are eligible to apply for a loan under the program. 

Program Highlights:

• $10,000 for down payment and/or closing cost assistance
• 0% interest loan
• 5 or 10 year loan term
• First payment will be deferred for 5 years from closing date
• Payment amount $83.33 OR $166.67 monthly, depending on term
• Borrower must be a First Time Homebuyer (excludes qualified Veterans)
• First Time Homebuyer counseling required
• Minimum credit score 640

Borrower Requirements:

• Income: May not exceed 80% area median family income regardless of family size
• Liquid Assets: May not exceed $15,000 (excluding retirement and/or 401K accounts)
• Home Value Limits: Total contracted purchase price of the single family mortgage limits under Section 203(b) of the National Housing Act
• Combined Loan-to-Value: Must not exceed 105%

Eligible Properties:

• New and existing single family homes, townhomes, and condominiums

Mortgage Market Update

Yesterday’s stock rally allowed the Dow to recover 423 points and the Nasdaq 111 points of their recent losses. That, along with a weak 30-year Bond auction, led to further bond market selling during afternoon trading. Many lenders revised pricing higher late yesterday, but the size of the increase varied greatly between lenders. It will be interesting to see how the day goes as we wrap up one of the most memorable and volatile weeks that many can recall. The bond market is showing some strength, bucking the traditional "higher stock prices equal bond selling" trend. I would not be surprised to see more movement during afternoon trading as investors close out positions and protect themselves over the weekend. This may lead to afternoon changes to mortgage rates yet again today.

The Commerce Department reported early this morning that retail level sales rose 0.5% last month, meaning consumers spent more in July than they did on June. By theory, that is negative news for the bond market and mortgage rates, but since it matched forecasts it has not has not had much of an impact on this morning’s trading. If more volatile auto-related transactions are excluded, we saw a larger than expected increase in sales. However, it appears to have had no bearing on today’s rates.

Today’s second report came from the University of Michigan, who said their Index of Consumer Sentiment for August fell to 54.9. This was well below forecasts of 62.5, indicating a significant decline in consumer confidence about their personal financial situation. That is certainly good news for the bond market and mortgage rates because it means that consumers are less apt to make large purchases in the near future, limiting economic growth.

Next week brings us the release of several relevant economic reports, including two key inflation indexes. None of the data is scheduled for release Monday, so we can expect to see the bond market react to stock strength or weakness and any news that comes over the weekend.