The Latest Developments on the First-Time Homebuyer Credit

11/28: Senate leaders struck a compromise to extend the first-time homebuyer credit. In this deal, sales contracts would have to be signed by April 30, 2010 and close by June 30, 2010. Along with this extension, lawmakers added a provision that would allow individuals who are not first-time homebuyers the opportunity to take advantage of this tax credit. The agreement indicates that if you have owned your current primary residence for more than 5 years and you purchase a new home, you will be eligible for a $6500 tax credit. Just like the credit for first-time homebuyers, the buyer would have to sign the contract before April 30 of next year and close by June 30 of next year.

11/30: Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan issued a statement saying, “We welcome efforts taken by Congress to extend the first-time home buyers tax credit for a limited period.” This basically means that the President would sign into law a bill that extends the first-time homebuyer credit.

A couple of things to note from these latest developments are:

The joint statement issued by the Obama administration today made no mention of allowing repeat buyers the opportunity to take advantage of the tax credit.
This compromise or deal is only an amendment to a much larger bill that is still making its way through the Senate.
Even if this bill makes it through the Senate, it still has to get passed by the United State House of Representatives.

My thoughts are still that this, or something close to it, is going to happen. However, there is still some work that needs to be done

Market Update (10/30/2009)

You have often read in my updates that stocks and bonds compete for the same money. Never more than the last two days has that been more apparent. Yesterday the stock market showed huge gains and money flowed out of the bond market. Today, the opposite is true. The DOW Jones Industrial is down almost 150 points and the bond market is making gains. What does it all mean to us? Really, really good mortgage interest rates.

Have a great day and a spooky Halloween!

Market Update (10/26/2009)

Rates are still holding steady. This is good news since they are holding steady at a rate below 5.5%. The big news for the day is it does look more and more likely that the tax credit will be extended. I have attached a link to a Reuter's article describing this potential extension.

http://www.reuters.com/article/newsOne/idUSTRE59P3VO20091026

Market Update (10/22/2009)

Rates stayed steady today, but that could change later on.

The big economic news of the day is that the US Treasury Department announced that it is going to auction off $116 billion of notes next week. First of all, is anyone else concerned that the US government is going over $100 billion deeper into debt just to cover a two week period? WOW! Secondly, how does this affect the mortgage interest rate market? As you have heard me discuss in previous updates, new competition for investment dollars is usually not good for mortgage backed securities. However, to find out the true effect, we will have to wait until the auctions actually take place. This will happen next week. If the Treasury Department struggles to sell these notes, then mortgage backed securities will lose value and mortgage interest rates will go up. We will be watching.

Market Update (10/21/2009)

Rates are back up a little this morning. The reason—INFLATION. Although all of the leading indicators show inflation to be moderate to nonexistent at this time, the future does not look as positive. China announced this morning that their economy will be “battling inflation in the coming months.” I continue to tell you that it is inevitable. This combined with the winding down of the Fed’s purchase of Mortgage Backed Securities makes this the best time to purchase a home. This is true even if the Obama administration decides to extend the homebuyer tax credit.



Tomorrow we will be watching closely as the United States Treasury Department will announce their auction schedule for next week. This schedule will determine how many new Treasury Notes will be hitting the market. Remember that these Treasury Notes compete with Mortgage Backed Securities for investment dollars. More competition could lead to lower values for Mortgage Backed Securities and higher mortgage interest rates.