Tuesday Morning Coffee - Market Recap

This just in from one of my favorite lenders....

MARKET RECAP

We 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.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

Quote of the day from Ellen DeGeneres:  "I know that "personality can open doors, but only character can keep them open."