Mortgage Rates Drop Again

The average 30 year mortgage rate has dropped this week to 4.71 from 4.78 last week this according to mortgage finance giant Freddie Mac on Thursday This is the lowest since 1971 since the agency had began compiling its weekly survey. Mortgage rates have been relatively low much of the year do to the Federal Reserves heavy buying of mortgage-backed securities. This 1.25 trillion dollar program was designed to push money into the housing market and is due to end this coming spring. The 15 year rate is down to 4.27 from last weeks 4.29. However lenders are now requiring higher credit standards than last year and larger down payments up to 20% on purchases. The new low rates have spawned an increase in loan applications. Thanksgiving week there was a 2.1% increase on a seasonally adjusted basis from a week earlier according to the Mortgage Bankers Association.

The new home buyer Tax Credit

Well its a done deal the home buyer credit has been extended. The details are as follows: Contract has to purchase has to be in place by 04/30/2010, home has to close by 06/30/2010. Those who have not owned a home for the past 3 years can take advantage of the $8,000 tax credit. Those who purchase a new principal residence and have lived in their current home for 5 years can claim a $6,500 tax credit. This should keep homes sales rising!

Pending Home Sales Rise

Pending home sales have increased for 7 straight monthsthe longest in the series of the Pending Home Sales Index which began in 2001, this according to the National Association of Realtors. Based on contracts signed in August, rose 6.4 percent to 103.8 from a reading of 97.6 in July, and is 12.4 percent above August 2008 when it was 92.4. The index is at the highest level since March 2007 when it was 104.5. Buyers are coming out of the woodwork looking for affordable buys. This may be in large part to first-time home buyers taking advantage of the $8,000 tax credit that expires on the 3oth of November of this year. Some deals are not making it to the closing table however, due to long delays associated with short sales as well having to deal with the maze of new appraisal rules that exist currently. All in all this is a good indication that this momentum may continue, especially if the tax credit is extended, there is a good chance it may be......check back for more on that!