Last week, the Federal Reserve reiterated that their Mortgage Backed Security (MBS) purchase program, which has helped keep home loan rates at their lowest in decades, will end on March 31, 2010 as planned. What affect will this have on home loan rates, and when will it happen?

During their most recent meeting last week, the Federal Reserve kept the Fed Funds Rate unchanged. Historically, this has proven to lead to higher inflation, especially if rates remain low for too long a period. However, if rates are allowed to fluctuate higher too soon, it can cause an abrupt halt to a fragile recovery. They continue to monitor the timing of a rate increase to strike the right balance.


Currently, the rate that the Fed is purchasing MBS (Mortgage Backed Securities) has diminished, and they still have $163 Billion left to purchase before the March 31st deadline, which in turn means the Fed will purchase about $11.5B on average each week through the end of the buying program. This is less than half of what the Fed was buying regularly throughout 2009 and a 1/3 less than what the Fed has been buying in recent weeks.

So why does this point to higher rates around the corner? When there is lots of supply and diminishing demand, the price of that item will subsequently go down.  And because mortgage rates are reversely tied to the Bond market, when Bond prices start to decrease from the diminishing demand of the Fed's purchases, home loan rates will naturally be likely to increase.

This doesn't mean that everyone should go out and buy a home before March 31st, but if you are currently in the market and know what you want in a home, you may want to lock in the best rate now. For daily interest rates, visit my website at www.kimstanley.com.


Adapted from information received from Primary Mortgage Grp.

It looks as though Congress will extend the $8000 Home Buyer Tax.  The question is, will it benefit you? Since the deadline is fast approaching for everyone else I'm sure there will more information to come of this topic, but this extension is a very fair and good sign of potential savings to come for all home buyers.
  
HR 3590 will allow eligible military personnel and foreign service and intelligence officers to apply for the $8,000 tax credit for one year beyond its current November 30 deadline. Those meeting the underlying requirements for the credit must also be serving overseas or have spent at least 90 days deployed outside of the country during the current calendar year. It is expected that about 350,000 military personnel and an unknown number of federal employees may be affected by the new law.

There is currently a battle being waged over extending the popular credit for all eligible persons and possibly even removing the requirement that the home be a qualified first-time purchase. Many credit the current tax break for a recent surge in the housing market after months of rising inventories and falling prices. Such an extension is strongly supported by the National Association of Realtors, the National Association of Homebuilders, and other major players in the housing industry, however, many argue against it on the basis of cost.

The Rangel bill will also prohibit the Internal Revenue Service from pursuing payback of the credit if the homeowner is deployed after receiving it. Under the original law a homeowner was required to occupy the home for 36 months or the credit would be recaptured. Because the military, the State Department and intelligence agencies frequently relocate their personnel and their families, some have been reluctant to apply for the credit even if they did purchase a home.

The bill must still be considered by the Senate but similar easy passage is expected.

It appears the $8000 1st Time buyer tax credit has worked, as the U.S. housing market appears to be coming off of its worst downturn in more than 60 years, boosted by a combination of market forces and government assistance, economists say.

The media bombards us with news of how horrible the real estate market is right now – rampant foreclosures, plummeting home values, vacant neighborhoods.   But how does Columbia compare with what we see and hear in the news? 

This year’s number and volume of single family home sales have fallen back closer to the levels of 2002, before the real estate bubble expanded.  This equals about 2000 single family homes sold in 2008, down about 350 from the previous year.  Most predictions for the local market are that it will be a flat year, with number of home sales and overall volume staying the same.  Average sold prices remained steady until the 4^th quarter, when they decreased 4%.  This is much less than many other markets across the country, and comes after years of steady increases.  Most experts agree that the real estate market will recover in 2010.

What does this mean for home buying and selling in Mid-Missouri?

1.    Sellers may have to take less than would have 2 years ago, but they can purchase a lot more home now.

2.    Homes that are move-in ready (or close to it) are still in demand.

3.    For those who have money to invest, real estate is a bargain.

Every neighborhood is unique, and only an individual Comparative Market Analysis can give you a better idea of what your home is worth.  That is why, beginning next week, I will start forwarding you statistics on active, sold and average prices of properties in a specific neighborhood.  Each week I will feature a different neighborhood.  Hopefully during this year I will touch on the neighborhood you live in or want to live in, providing you with an inside look at the diverse real estate in this wonderful community

In the meantime, if you want to know more about a specific neighborhood or property not featured, call or e-mail me and I’ll gladly provide you with that information.  There are some great opportunities out there, and it’s my job to help you capitalize on them!