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Monday, June 21, 2010
June 16th Update!
Today, the Senate passed an extension to the tax credit. However, the credit provision is part of a larger jobs and tax package that both chambers must still vote on before it becomes law. This extension, if passed, would allow only those individuals who already have signed contracts to complete the transaction after June 30th. More information will be passed along as Congress works on this extension.
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WASHINGTON — The Senate on Wednesday approved a plan to give home buyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring. The move by Senate Majority Leader Harry Reid would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale. The proposal, approved by a 60-37 vote, would only allow people who already have signed contracts to finish at the later date. About 180,000 homebuyers who already signed purchase agreements would otherwise miss the deadline.
Reid, D-Nev., added the proposal to a bill extending jobless benefits through the end of November. Nevada has the nation's highest foreclosure rate, and Reid is facing a tough re-election campaign. The Realtors group has been pushing hard in Congress for the extension. Mortgage lenders, the trade group says, have been swamped with borrowers trying to get approved by the end of the month. Many potential borrowers are unlikely to make the deadline. "If Congress fails to act promptly, then prospective homebuyers might not get the benefit of the homebuyer tax credit, even though they have completed contracts," the Realtors said in a letter to lawmakers.
First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500. The $140 million cost of the measure would be financed by denying businesses the ability to deduct from their taxes punitive damages paid when losing lawsuits or judgments.
The information above was provided by James A Williamson of Fairfield Mortgage.
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WASHINGTON — The Senate on Wednesday approved a plan to give home buyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring. The move by Senate Majority Leader Harry Reid would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale. The proposal, approved by a 60-37 vote, would only allow people who already have signed contracts to finish at the later date. About 180,000 homebuyers who already signed purchase agreements would otherwise miss the deadline.
Reid, D-Nev., added the proposal to a bill extending jobless benefits through the end of November. Nevada has the nation's highest foreclosure rate, and Reid is facing a tough re-election campaign. The Realtors group has been pushing hard in Congress for the extension. Mortgage lenders, the trade group says, have been swamped with borrowers trying to get approved by the end of the month. Many potential borrowers are unlikely to make the deadline. "If Congress fails to act promptly, then prospective homebuyers might not get the benefit of the homebuyer tax credit, even though they have completed contracts," the Realtors said in a letter to lawmakers.
First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500. The $140 million cost of the measure would be financed by denying businesses the ability to deduct from their taxes punitive damages paid when losing lawsuits or judgments.
The information above was provided by James A Williamson of Fairfield Mortgage.
May 26th Update!
Mortgage Rates Plummet
Just when everyone seems to be predicting that mortgage rates will rise, out of the blue they have dropped to the low point of the year! This remarkable development has occurred for the following three reasons:
1. Global economic concerns. The trouble in Europe continues to brew and threatens to spread as European countries are forced to reduce government spending. In addition, Chinese officials are now focused on tightening monetary policy to reduce inflation. Also, tensions between North Korea and South Korea continue to build. Investors have reacted to these crises by shifting money to relatively safer assets such as bonds and U.S. mortgage-backed securities (MBS) and this has had the effect of pushing mortgage rates lower.
2. Domestic economic uncertainty. In the U.S., it's not clear to what degree a newly proposed financial regulation bill will cause banks to reduce lending and lead to slower economic growth. In response to periods of uncertainty such as this, investors seek to reduce risk by moving to safer assets which, again, has led to lower rates.
3. Tame inflation. April Core CPI inflation fell to the lowest level in 44 years!! Low inflation always equates to low rates.
Mostly Positive Economic Data
On the housing front, recent news has been mostly positive. March Pending Home Sales increased 5.3% from February and were 21% higher than one year ago at this time. April Housing Starts increased above the consensus forecast to the highest level since October 2008. In addition, the May NAHB Homebuilder confidence index rose to the highest level since August 2007. Although the number of builder permits declined moderately, builders surveyed remained optimistic about sales over the next six months even as the home buyer tax credit expired.
More good news to report as retail sales rose for 7th straight month and oil prices fell to $65 per barrel reaching the lowest level since July 2009. The correlation between oil prices and mortgage rates is staggering!
On the jobs front, the weekly jobless claims unexpectedly jumped well above the consensus forecast and this figure will be closely watched over the next few weeks.
Flood Insurance Program Set to Expire
The National Flood Insurance Program is set to expire on May 31st. By law, a lender has to check to see if a property is in a flood zone before a mortgage can close. If the flood cert comes back negative (as most in Atlanta area do), there isn't an issue. However, if it comes back positive, the appropriate flood insurance coverage must be obtained prior to closing. If Congress does not address this issue and extend the program this week (they are not in session next week), the program will expire for the third time this year! This means that any loan closings scheduled that do not have the required flood insurance arranged by Friday will have to be delayed. Just what we need in this market! Congress has allowed this issue to linger for months and one existing proposal only would extend the program through Dec 31. Our elected officials need to figure this one out and quick or there are going to be some serious repercussions to anyone wanting to buy a house who needs flood insurance.
Rate Update
Mortgage rates have reached the lowest point since early December of 2009!
Looking Ahead
The last half of this week will be busy with New Home Sales and Durable Orders figures being released today. Also, a revised figure for first quarter Gross Domestic Product (GDP) will be released tomorrow and the Chicago PMI Manufacturing Index and Personal Income on Friday. Consumer Sentiment and Consumer Confidence round out the busy week.
All information above was provied by James A Williamson of Fairfield Mortgage
Just when everyone seems to be predicting that mortgage rates will rise, out of the blue they have dropped to the low point of the year! This remarkable development has occurred for the following three reasons:
1. Global economic concerns. The trouble in Europe continues to brew and threatens to spread as European countries are forced to reduce government spending. In addition, Chinese officials are now focused on tightening monetary policy to reduce inflation. Also, tensions between North Korea and South Korea continue to build. Investors have reacted to these crises by shifting money to relatively safer assets such as bonds and U.S. mortgage-backed securities (MBS) and this has had the effect of pushing mortgage rates lower.
2. Domestic economic uncertainty. In the U.S., it's not clear to what degree a newly proposed financial regulation bill will cause banks to reduce lending and lead to slower economic growth. In response to periods of uncertainty such as this, investors seek to reduce risk by moving to safer assets which, again, has led to lower rates.
3. Tame inflation. April Core CPI inflation fell to the lowest level in 44 years!! Low inflation always equates to low rates.
Mostly Positive Economic Data
On the housing front, recent news has been mostly positive. March Pending Home Sales increased 5.3% from February and were 21% higher than one year ago at this time. April Housing Starts increased above the consensus forecast to the highest level since October 2008. In addition, the May NAHB Homebuilder confidence index rose to the highest level since August 2007. Although the number of builder permits declined moderately, builders surveyed remained optimistic about sales over the next six months even as the home buyer tax credit expired.
More good news to report as retail sales rose for 7th straight month and oil prices fell to $65 per barrel reaching the lowest level since July 2009. The correlation between oil prices and mortgage rates is staggering!
On the jobs front, the weekly jobless claims unexpectedly jumped well above the consensus forecast and this figure will be closely watched over the next few weeks.
Flood Insurance Program Set to Expire
The National Flood Insurance Program is set to expire on May 31st. By law, a lender has to check to see if a property is in a flood zone before a mortgage can close. If the flood cert comes back negative (as most in Atlanta area do), there isn't an issue. However, if it comes back positive, the appropriate flood insurance coverage must be obtained prior to closing. If Congress does not address this issue and extend the program this week (they are not in session next week), the program will expire for the third time this year! This means that any loan closings scheduled that do not have the required flood insurance arranged by Friday will have to be delayed. Just what we need in this market! Congress has allowed this issue to linger for months and one existing proposal only would extend the program through Dec 31. Our elected officials need to figure this one out and quick or there are going to be some serious repercussions to anyone wanting to buy a house who needs flood insurance.
Rate Update
Mortgage rates have reached the lowest point since early December of 2009!
Looking Ahead
The last half of this week will be busy with New Home Sales and Durable Orders figures being released today. Also, a revised figure for first quarter Gross Domestic Product (GDP) will be released tomorrow and the Chicago PMI Manufacturing Index and Personal Income on Friday. Consumer Sentiment and Consumer Confidence round out the busy week.
All information above was provied by James A Williamson of Fairfield Mortgage
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