Why Buyers Might Not Want to Wait Until April 30th

In observance of Martin Luther King, Jr. Day, the market is closed today. This gives me the opportunity to give a brief reason why buyers might not want to wait until the April 30^th deadline for the tax credit to purchase a new house.

That reason is the higher rates that are inevitable. I have been preaching this for some time now, but rates will go up this year. Do we know exactly when? No. What we do know is that the federal government’s tool that has been used to move interest rates to 5% is ending on March 31. This tool is the Federal Reserve’s mortgage backed security purchase program. You might hear whispers in the next couple of months that this program might be extended. Those whispers will probably be half-true. On the one hand, the Fed will probably reserve the right to purchase mortgage backed securities in the future. However, I would be very surprised if any additional money will be allocated outside of the $1.25 Trillion that was allocated last year. In essence, the program will end and mortgage interest rates will go up.