What a great beginning of the week!!!!
Weather is going to be interesting in the Gulf Coast area over the next few days and pretty nice in the remainder of the country.
Don't know how you felt about the expiring $8000 incentive for first time buyers. But as you may or may not have heard, it has been extended until April 30th. In addition, homeowners owning a home for 5 years(with some stipulations) can get a $6500 tax credit. Thus, if you thought about moving the Obama administration is doing its best to make it economically justified. With interest rates still at 5% or lower, you have a decision to make.
Yet, to give you a total rundown on the new initiative and the financial market, I have attached information provide by a great mortgage officer, Jim Belote.
Keeping you updated on the market! For the week of
November 9, 2009
MARKET RECAPWe can finally stop talking about the federal homebuyer credit extension and start living it. This go around, the credit has not only been extended, it has been improved. First-time homebuyers – anyone who hasn't owned a home in the past three years – will still get up to $8,000 to apply against their federal tax liability, but buyers who have owned their current homes at least five years will also be eligible for tax credits of up to $6,500. To qualify, buyers must sign a purchase agreement no later than April 30, 2010 and close by June 30.Just as important, if not more so, the extension also raises income ceilings. The new version has the credit phasing out for individuals with incomes above $125,000 and for joint filers with incomes above $225,000. The phase-out increase means the new credit will be applicable to higher-priced homes (though the purchase price can't exceed $800,000); thus, stimulating sales in more expensive categories.The Federal Reserve's stance on interest rates was another home-buying positive. On Wednesday, the Fed stated that it will maintain the federal funds rate – the rate banks lend to each other – near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline. The fed funds rate is an important benchmark for other lending rates, so the Fed's pronouncement bodes well for borrowers seeking a mortgage loan.Of course, a job trumps tax considerations and lending rates in any borrowing or purchasing decision. Unfortunately, the trend on job creation remains down. The unemployment rate rose again in October, due to employers shedding another 190,000 jobs. The unemployment rate now stands at 10.2%, the highest it has been in 26 years.The news on the employment front is discouraging, to be sure, though recent payroll data reflect some improvement. The rate of job cuts has lessened dramatically when you consider that 741,000 jobs were shed in January alone. It's also worth noting that new claims for unemployment benefits decreased by 20,000 to 512,000 in the week ended October 31, the lowest level since January 3. And if you happen to be the-cup-is-half-full type, you can take additional solace in knowing employment figures are lagging, not leading, indicators.
Economic IndicatorRelease Date and TimeConsensus EstimateAnalysisMortgage Applications Thurs, Nov. 12,7:00 am, etNone Important. Activity should pick up on lower rates and extension of the federal homebuyer's tax credit. International Trade(September) Fri, Nov. 13,8:30 am, et $31.5 Billion (Deficit) Moderately Important. The deficit is expanding (modestly) on higher oil prices. Import Prices(October)Fri, Nov. 13,8:30 am, et0.5% (Increase) Important. Recent increases are posing evidence that the weak dollar is increasing inflation pressures . Consumer Sentiment(November)Fri, Nov. 13,10:00 am, et72 Index Moderately Important. Sentiment generally mirrors the latest news, which has been trending positively.
Continued Affordability....At Least for the Time Being Should we backpedal on our expectation for mortgage rates to rise, given the Federal Reserve's desire to keep lending rates low? For the immediate future, yes, though we still doubt they will go much lower. After all, there is a risk to lending, so investors demand a minimum return on their investment, and we think rates are at or close to that minimum return. Longer term (three months out), we remain convinced of the prospect for higher inflation: Gold is trading near $1,100 an ounce, hard commodity prices have surged, oil prices have doubled in the past seven months, and the spread between the 10-year Treasury note and the TIPs (a variable-rate Treasury security) has narrowed.We have to admit, though, that the window for borrowers to act has likely widened, but that doesn't mean potential homebuyers should play the mortgage-rate waiting game. We can't forget the other half of the equation – home prices, which should get a boost from the homebuyer credit extension. Moreover, these credits are chasing a dwindling supply of homes. According to data compiled by Web-based real estate brokerage ZipRealty, listings of single-family homes and condominiums declined an average 2.8% across 27 major metropolitan markets in October. ZipRealty also noted that national inventory has declined month-over-month for 16 straight months to the point where there are now 28% fewer homes for sale than there were in October 2008.In short, the stars remain aligned for refinancers and homebuyers to act today, but we don't expect them to stay aligned far into tomorrow.