Stimulus |

Posts Tagged ‘stimulus’

“Stimulus” Tax Credit Update

February 12th, 2009 |

Most of you know there has been, for about 9 months, a $7500 tax credit for first-time homebuyers for anyone that buys a house from April 2008 to July 2009. The new “stimulus” package currently wending its way through Congress contains a modification of that credit.

The Senate version of the bill had an increase in the credit to $15,000, made it for ALL homebuyers, and removed the payback provision of the original. The conference committtee, however, has downsized that credit to $8000, rolled it back to just first-time homebuyers, and protected only the 2009 January to August purchasers from repaying. If you bought last year, in other words, you get another $500 but you still have to pay the credit back over 15 years.

Personally, I hate it when Congress does most anything, but this back-and-forth, you get the credit but you don’t silliness is not going to help the markets at all.

The credit is targeted at the wrong people, timed incorrectly, is a tax-accounting nightmare and overall one of the stupidest non-ideas I can remember. And I like tax credits.

More here.

Posted in Ask The Magician & FAQ, Blog & News, Rate Watch |

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RateWatch Friday Feb 6

February 6th, 2009 |

Author: chrisjones

Here’s the thing. Markets have displayed a huge amount of volatility over the past several months. Where once mortgage-backed securities (those things that actually control mortgage rates) would trade in a 35bp range on an average day in 2006, today we have 100 bp days all the time, and it’s not all that unusual. At least, that was true until the last three weeks. For the last three weeks, we’ve been trading sideways in very narrow ranges, almost always slightly down. It’s maddening, frankly. Rates are being ground higher a bit at a time, just a hair here and a hair there, until where once we quoted 4.75%, today we’re talking about 5.375%, and that’s only for those with 740 credit.

So the big question is: what’s going to happen next? Up or down?

And the answer is: who could possibly know? There are two wild cards here. One is Fed buying, which is still going on, but is probably being muted in its effect by Treasury selling of bonds, and the other is the “stimulus” package being argued over in Congress. Nobody knows what provisions that will contain, and until we do, no bank is going to be interested in lending money. Why bet your company in a game where the rules might change from one day to the next?

I’ll make a prediction, because you’d be disappointed if I didn’t. I predict that the stimulus package will pass by the end of next week, and give us a boost to the downside on rates for mortgages that will be powerful but brief, like two or three days brief. To take advantage of it, you’ll need someone with his finger on the trigger who can lock immediately, but who also can get the loan closed before the lock blows. Broker underwriting is averaging over 30 days right now. Our underwriting is 48 hours. We can – and do – close loans from application to fund in less than two weeks. The rally we get will be followed by more slow upward grinding, until the middle of this year, when rates will spike as the Fed runs out of buying power.

That’s the call. Put on your booties ’cause it’s cold out there today. It’s cold out there every day.

Posted in Rate Watch |

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