Home Buyer Tax Credit Could Expand
A first-time home buyer tax credit of up to $8,000 has helped to move housing inventory during an otherwise sluggish real estate cycle. Now both legislators and the business community are hoping to build on the incentive’s success by expanding it.

A number of bills have been introduced in the House and the Senate that lobby for an expansion of the measure. Among the proposed changes:

• Setting a new cap of $15,000.

• Extending the tax break into mid-2010.

• Making the benefit available to all home buyers, not just first-timers.

• Offering a separate tax credit to $3,000 for borrowers who refinance.

USA Today, Stephanie Armour (06/22/09)

This would be awesome. A better break from the IRS and non 1st time home buyers quailfy? Hope this happens! Remember, I am always here to answer any real estate needs.

As Rates Rise, Fed Holds Steady
Yields on U.S. Treasury bonds rose in March and April and yields on mortgage-backed securities continue to increase, pushing 30-year fixed home loans up to 5.44 percent—the highest rate for mortgages since early February.

The Federal Reserve is buying Treasurys and mortgage-backed securities (MBS) in an attempt to keep borrowing costs low and to provide the financial system with money for lending.

However, there is some concern about the amount of borrowing needed to fund the campaign, which has resulted in the purchase of $130.5 billion in long-term Treasury debt and $481 billion in MBS so far. Yet the market still believes the central bank will expand its purchases in order to restrain long-term rates.

Source: The Wall Street Journal, Jon Hilsenrath and Liz Rappaport (05/29/09)

Rates Rise as Investors Tap Short-Term Gains
Mortgage rates rose yesterday to a six-month high. This spike occurred after the gap between yields on two-year Treasury notes and 10-year notes, called the yield curve, widened to 2.75 percentage points, its highest ever.

To keep mortgage rates low, the U.S. Treasury has been buying mortgage-backed securities and Treasurys. But as short-term yields rose, the Treasury failed to intervene. The net effect is higher rates on short-term bonds that make mortgage-backed securities less attractive.

That drove the average 30-year mortgage rate up to 5.29 percent from 5.03 percent the previous day, according to HSH Associates, a mortgage-data publishing firm.

What’s next seems unclear. Marcus Huie, Treasury’s strategist for Deutsche Bank AG, believes the government will intervene to keep mortgage rates low. “The market is testing the Fed to hold the current yield levels,” he says.

Source: The Wall Street Journal, Liz Rappaport (05/28/2009)