Austin Mortgage Blog

Archive for December, 2009

The consensus among analysts seems to be for another 10% decline in home prices in 2010, making a new bottom

For the first time in nearly two weeks, bond prices rose across the curve on Tuesday and climbed slightly higher this morning. The economic data came in very close to estimates yesterday and the five-year note auction fared a touch better-than-expected. The S&P / Case Shiller home price index fell in October after five straight monthly increases. While the decline was barely measurable, it serves as a reminder that the bounce back in real estate prices is not likely to occur as quickly as the three-year decline. The consensus among analysts seems to be for another 10% decline in home prices in 2010, making a new bottom.

The Conference Board’s consumer confidence measure rose a touch to 52.9 and has been confined to a narrow range since April. Confidence remains well above its lows but is still below previous recession’s lows and well below the “normal” levels. The five-year note auction was solid, finding better-than-expected demand, especially following the soft two-year note sale the previous day. Today, the Treasury will auction $32 billion seven-year notes at high noon.

The last bit of news for the week will be released tomorrow with weekly claims.  Trend signals in the last couple of weeks of the year can have trouble maintaining their direction in January.  Current bearish readings on Trend Intensity remain valid, but are getting tested by a very minimal corrective action.  Trend signals need prices to continue to hold below the 8-day moving average that currently sits at 116-045…..that measure is often critical resistance during a bearish trend.  However, a close above that level would neutralize any bearish readings.  The 10yr is currently sitting at 115-22 on futures, a yld of 3.807.  We priced mtg backs up this morning about 7-8 ticks and we are now only up a couple.  I don’t want to scare anyone, but price changes for the worse would be in play if we hold these current levels.  Please note that tomorrow is an early market close.

To everyone out there – Have a Happy New Year!!

Austin Mortgage Rates Rise at Year End

The final two weeks of December have not been kind to mortgage rates. Stronger than expected economic data, comments from Fed officials, and a stock market rally all were negative for mortgage markets, and mortgage rates moved higher during the period.

Heading into December, mortgage rates were close to record low levels, but a combination of factors caused them to increase throughout the month. First, an improving economic outlook, which is good news for the country, is negative for mortgage markets because it generally leads to higher inflation. Second, the government already will need to issue an enormous amount of debt to pay for its spending, and it now looks more likely that additional expenditures are on the way for job creation and health care bills. Higher yields are required to attract investors to purchase the extra debt, pushing up yields for competing investments such as mortgage-backed securities (MBS). Finally, the Fed is winding down its $1.25 trillion MBS purchase program, reducing demand for mortgage investments.

With mortgage rates that are still historically low, high levels of affordability, and the homebuyer tax credit, the housing sector outlook for 2010 is for improvement from 2009. According to projections from the Mortgage Bankers Association (MBA), sales of existing homes are expected to increase by more than 10% next year. In addition, housing starts will rebound sharply from extremely low levels, and median home prices will move a little higher. Forecasts from the National Association of Realtors (NAR) and from Fannie Mae are generally consistent with the outlook from the MBA.

Week Ahead

The biggest economic event next week will be the important Employment report on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before the employment data, the ISM manufacturing index will be released on Monday. Pending Home Sales, a leading indicator for the housing market, will come out on Tuesday. ISM Services and the minutes from the December 16 Fed meeting will be released on Wednesday. Construction Spending and Factory Orders will round out the schedule. In addition, the Treasury will announce the size of upcoming auctions on Thursday.

Until we see a bottom (which we feel is close) you must stay on defense

Not much going on as we enter holiday week two of two.  The 2 year note auction hit the tape however, posting a yield of 1.089% with indirect bidders taking 35% of the issue.  The bid to cover was 2.91 to 1 and the 44 billion dollar devil grew a 1.4 bps tail.  The indirect bidders saved this auction, otherwise we would refer to it as a Toy Poodle or in Texas, a Chihuahua (small dog).   Light volume is all that’s happening in both stocks and bonds, with the 10 year note off 8/32’s (yield 3.84%) and mortgage backs off 7/32’s.  Stocks aren’t much better, down 6 or so points on the big board.  Momentum on the fixed income side (notes, bonds, MBS) is decidedly bearish but losing some of its power.  These reading are expressed by a number of studies such as Trend Intensity, RSI, and MACD.  This is starting to look a little long in the tooth as the market tries to carve out the low end of a new trading range.  Another point of bullish contention or at least optimism is that month end, year end extensions (hedge funds, mutual funds, etc.) are quite large.  The treasury complex needs to extend .06.  The average is .02.  The Government/Credit index also needs to tack on .06 years, double the average.  MBS extensions needed are a hefty .07 years.  This will force fixed income traders to buy the market and should help our pricing into year end.  Trouble is, every sector of the curve remains weak and cannot be trusted.  Until we see a bottom (which we feel is close) you must stay on defense.  Kind of a Yogi Berra thing, “it’s not over till it’s over.”

Austin Mortgage Market Update – For the week of December 28, 2009

For the week of December 28, 2009 – Vol. 7, Issue 52 >> Austin Mortgage Market Update INFO THAT HITS US WHERE WE LIVE Last week presented us with divergent housing news. First, November Existing Home Sales came in UP 7.4%, at an annual rate of 6.54 million. This was way ahead of estimates and a 44.1% sales jump over a year ago. We had increases in all regions of the country, all due to single-family homes. The median price went up to $172,600, down 4.3% from a year ago, but a big improvement from January, when prices were off 17.5% from the prior year. The supply declined to 6.5 months, as inventories fell to 3.52 million, their lowest level since December 2006. In the past three months, Existing Home Sales are up 28.5%. One more sign of housing market recovery came in a report that prices for homes financed with conforming mortgages increased 0.6% in October. Now for the news in the other direction. November New Home Sales fell 11.3%, to an annual rate of 355,000. But November was an unusual month, with uncertainty over the tax credit slowing things down. New Home Sales are still UP 7.9% from January and inventories dropped in November to 235,000. This is the lowest level since 1971 and a 58.9% decline from the mid-2006 inventory peak. So even at this slower sales pace, experts feel home building will have to increase over the next few months to meet the demand that’s out there. >> Review of Last Week UP WE GO… Four days of trading saw gains in the Dow of 85, 50, 1.5 and 53 points. These amounted to a weekly gain of almost 2%, a strong move up. The other major indexes went up even more and all hit new 52-week highs, so some observers think we may be off on another bull run. Inspiring investor confidence were some good economic data points. Tuesday, real growth in Q3 GDP was revised to a +2.2% annual rate from the previous +2.8% estimate. This was fine with investors, who saw that most of the downward revision was from lower inventory figures, which they feel should boost growth estimates for Q4. Hey, last January, the consensus forecast was only a +1.2% growth rate for Q3 GDP and +2% for Q4. And the odds were still 45% that the recession would last through the end of the year. Wednesday, November Personal Income was up for the eighth month in a row, while the PCE inflation reading was up less than expected. The personal saving rate is at 4.7%, averaging 4.6% for the last 12 months. (It was less than 1% in early 2008!) The short week ended with an early Christmas present for the economy. Core capital goods shipments were up three months in a row, after October’s 0.3% decline was revised to a strong 1.5% rise. Some economists now feel real GDP growth may come in at a +5% annual rate for Q4! For the week, the Dow was UP 1.9%, to 10520.10; the S&P 500 was UP 2.2%, to 1126.48; while the Nasdaq was UP 3.3%, to 2285.69. As stocks continued their upward moves, bonds prices dropped for the week. Adding to the downward price pressure, investors are feeling the economic recovery is taking hold and now worry about longer-term inflation. The FNMA 30-year 4.5% bond we watch ended the week down 141 basis points, closing at $99.81. Mortgage rates inched up for the third straight week, but still remain at historically low levels. >> This Week’s Forecast A QUIET WEEK FOR SANTA CLAUS… The four days leading up to New Year’s are slim on economic news. Consumer Confidence looks at our mindset and the Chicago PMI gauges manufacturing, on the mend for several months now. The big thing to look for is a “Santa Claus Rally” sending stocks northward to finish the year. Stock and bond markets will be closed Friday for the holiday. May you and yours enjoy a healthy, prosperous and Happy New Year! >> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of December 28 – January 1 Date Time (ET) Release For Consensus Prior Impact Tu Dec 29 10:00 Consumer Confidence Dec 53.0 49.5 Moderate W Dec 30 09:45 Chicago PMI Dec 55.1 56.1 HIGH W Dec 30 10:30 Crude Inventories 12/25 NA –4.84M Moderate Th Dec 31 08:30 Initial Unemployment Claims 12/26 465K 452K Moderate Th Dec 31 08:30 Continuing Unemployment Claims 12/19 NA 5.076M Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. With last week’s benign inflation readings and revised Q3 GDP growth, experts feel the Fed will hold to their commitment to keep rates low for an extended period. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Jan 27 0%–0.25% Mar 16 0%–0.25% Apr 28 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Jan 27 1% Mar 16 5% Apr 28 11% This blog entry is an advertisement for Max Leaman. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is copyrighted by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2009 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company (NMLS #: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NY, NC, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Licensed by the Arizona Dept. of Financial Institutions-license #BK 0907334; California Department of Real Estate-license ID #01857468; California Department of Corporations- license #4130996; Connecticut Department of Banking-license #ML-13649; District of Columbia Department of Insurance, Securities and Banking- license #MLO13649, Illinois Dept. of Financial and Professional Regulation-license #MB.6760635; Indiana Dept. of Financial Institutions- license #11169; Maine Dept. of Professional & Financial Regulation-license #SLM8285; Maryland Dept. of Labor, Licensing & Regulation-license #11058; Massachusetts Division of Banking- license # MC5404, Michigan Dept. of Labor & Economic Growth-license #FR 0010163 and SR 0012527; Nevada Dept. of Business and Industry, Division of Mortgage lending-exempt license #732; New Hampshire Dept. of Banking- license #14553-MB; New Jersey Dept. of Banking and Insurance-license #0803658; New Mexico Regulation and Licensing Dept., Financial Institutions Division-license #01890; North Dakota Dept. of Financial Institutions-license #MB101786; Tennessee Dept. of Financial Institutions-registration #4023; Texas Regulated Loan License-license #7293; Vermont Dept. of Banking, Insurance, Securities and Health Care Administration- lender license #6127 and broker license #0964MB; Washington Dept. of Financial Institutions-license #520-CL-49075; Wisconsin Department of Financial Institutions-license #214170. NMLS# 151263

33% of the sales were distressed units and 51% of the borrowers were first time home buyers. Just think where we’d be without the 8K program

Looks like both Grandma and the market got run over by a reindeer!  GDP 3^rd Quarter (final revision) slipped to 2.2%, revised lower from the previous posting of 2.8%.  Downward revisions to nonresidential fixed investment, private inventory investment, and personal spending did the trick.  Economists were looking for a print of plus 2.8%.  Although the number was a disappointment, it is certainly better than the negative GDP growth we were seeing earlier in the year.  The unemployment picture however, will not heal with growth below 3.0%.  Existing Home Sales were also on tap, up 7.4% to 6.54 million units annualized.  33% of the sales were distressed units and 51% of the borrowers were first time home buyers.  Just think where we’d be without the 8K program.

Stocks are riding a Santa Claus rally, up another 50 something on the Dow and setting new 2009 highs on the Naz.  Bonds, notes, and mortgage backs have continued down their bearish path, starting in Australia and continuing through Asia and Europe.  State side traders picked up the ball and battered the market, driving mortgage backs down 20/32’s at the time we priced.  We have begun to stabilize but are just off the lows (yield 3.74%) as we speak.  Low volume trade or not, the chart shows a stunning break since last Thursday with no signs of letting up.  3.75% on the 10 year note is minor support and psychologically important but nothing to hang your hat on.  Bigger picture charts (weekly/monthly) warn of the next level of real support not coming in until we see 3.88% to 3.90%.  Market profile and trend intensity also tell us that the bears are in control.  Markets like this are dangerous, hoof prints on your back can be painful.

We expect a limited recovery as fixed income traders have a mind set of selling strength

Rough start to the holiday week as stocks are flying high and bonds, notes, and mortgage backed securities are taking all the punishment.  The selling stems from a better bounce in risk assets (stocks), Asia and Europe swap selling, and a WSJ article about “Rates may rise sooner than you think.”   Seems like a collection of lame excuses for a market that simply lacks liquidity.  The bias is for a trade on the 10 year between 3.54% and 3.63%.  With the note currently down 21/32’s to yield 3.63%, a bottom may be in the making but as of yet, cannot be trusted.  As a matter of fact, the 10 year note is very oversold, reaching yields not seen since August.  The 2 year note over 10 year note spread is now at 280 bps which is historically wide.  The combination of Ben Bernanle and his supporters (cheap money for an extended period of time) and inflation fears/economic growth on the horizon have teamed up to create this super steep yield curve.  No news today but Tuesday, Wednesday, and Thursday, will give us more than we asked for in a holiday shortened week.  Technically, the down trade (selling) has ended its parabolic decent, reaching levels that are attracting some buyers and fast money bottom fishers.  However, we expect a limited recovery as fixed income traders have a mind set of selling strength.  With the bears firmly in control and next week’s auction paper (2 year, 5 year, and 7 year notes) laying in the weeds (who’s going to buy it?), best bet is to stay defensive into year end.

Austin Mortgage Market – For the week of December 21, 2009

For the week of December 21, 2009 – Vol. 7, Issue 51 >> Market Update INFO THAT HITS US WHERE WE LIVE We saw strong evidence last week that homebuilders are well on their way to recovery. Housing starts for November were UP 8.9%, to an annual rate of 574,000 units. Single-family starts were 35.0% higher than their January and February lows. The very volatile multi-units starts were UP 67.3% from the previous month’s cyclical low. And get this — starts were UP in every major region across the country! Building permits are the future of homebuilding and guess what. They were UP 6.0% for November, to an annual rate of 584,000 units. This was above expectations and the fastest rise in a year. Single-family permits were UP 5.3%, registering their best pace since September 2008, when the economic mess began. Overall, homebuilding is UP in Q3 and many experts anticipate another gain in Q4 and even bigger increases in 2010-2011. Mortgage rates continue at attractive levels, though they’re creeping up. Fannie Mae’s survey for the week ending last Thursday showed 30-year fixed-rate mortgages averaging 4.94% with an average 0.7 point (including the origination fee) for 80% loan-to-value (LTV) ratio loans. Last week the Fed confirmed they would end their purchase program for Mortgage Backed Securities on March 31, 2010. This is expected to cause mortgage rates to keep inching up. One more reason for buyers to act now! >> Review of Last Week NO BULLS, NO BEARS… For yet another week the markets trended neither up nor down. Major indexes were mixed, with the Dow and S&P 500 down a bit but the tech-heavy Nasdaq showing strength bolstered by good earnings from Research In Motion (Blackberry to you and me) and software giant Oracle. We had signs of an improving economy AND encouraging words from the Fed, but investors were either selling to take profits from the market’s strong 2009 performance, or buying into the values available, but without much gusto. The Producer Price Index (PPI) for November shot up an unexpected 1.8%, but this inflationary signal for business wasn’t passed on to consumers. November’s Consumer Price Index (CPI) was up a milder and much more acceptable 0.4%, so inflation watchers remained calm. Chief inflation watcher, of course, is the Fed and they’re clearly not worried about rising prices. At last week’s meeting, they kept the Fed Funds Rate at 0% to 0.25% and did not change the part of their policy statement confirming they would keep rates “exceptionally low” for an “extended period.” The Fed’s statement also saw a strengthening economy, with consumer spending “expanding at a moderate rate” and “modest” income growth. They feel “the deterioration in the labor market is abating” and financial markets are now “supportive of economic growth.” Reflecting this positive view, Industrial Production showed nice gains for November and the Empire State index signaled manufacturing expansion in the New York region for the fifth month in a row.  For the week, the Dow was off 1.4%, to 10328.89; the S&P 500 was down just 0.4%, to 1102.47; while the Nasdaq was UP 1.0%, to 2211.69. Bonds had an up and down week with downward price pressure driving yields up. Mortgage rates followed suit, drifting a bit higher, as reported above. But concerns about Greece’s downgraded debt rating drove a flight to safety sending bond prices back up. The FNMA 30-year 4.5% bond we watch ended the week right where it began, at $101.22. Even though mortgage rates inched up some, they’re solidly below where they were a year ago and still at historically low levels. >> This Week’s Forecast SOME HOLIDAY GIFTS?… Christmas arrives on Friday, but the four-day week could have a few presents of its own. Tuesday, we’ll see the latest estimate on Q3 GDP, which should stay strong. We’ll also get November Existing Home Sales, followed the next day by New Home Sales. Wednesday has the PCE report, another key reading on inflation. And the weekly jobs numbers bear watching for any gifts they may bear. Stock and bond markets will be closed Friday for Christmas. Thursday, stocks will close at 1pm ET and bonds at 2pm ET. May you and yours have a Happy Holiday filled with joy and peace! >> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of December 21 – December 25 Date Time (ET) Release For Consensus Prior Impact Tu Dec 22 08:30 GDP – Third Estimate Q3 2.8% 2.8% Moderate Tu Dec 22 08:30 GDP Prices – Third Estimate Q3 0.5% 0.5% Moderate Tu Dec 22 10:00 Existing Home Sales Nov 6.25M 6.10M Moderate W Dec 23 08:30 Personal Income Nov 0.5% 0.2% Moderate W Dec 23 08:30 Personal Consumption Expenditures (PCE) Nov 1.6% 0.2% HIGH W Dec 23 08:30 Core PCE Nov 0.1% 0.2% HIGH W Dec 23 09:55 Univ. of Michigan Consumer Sentiment-Rev. Dec 73.7 73.4 Moderate W Dec 23 10:00 New Home Sales Nov 439K 430K Moderate W Dec 23 10:30 Crude Inventories 12/18 NA –3.69M Moderate Th Dec 24 08:30 Initial Unemployment Claims 12/19 470K 480K Moderate Th Dec 24 08:30 Continuing Unemployment Claims 12/12 5.175M 5.186M Moderate Th Dec 24 08:30 Durable Goods Orders Nov 0.5% –0.6% Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. The Fed at last week’s meeting reiterated their “rates should stay low for an extended period” mantra. However, they did comment that the economy has picked up and the jobs situation seems to be easing. A stronger economy with more jobs will trigger a rate hike, so sentiment is building for one next Spring. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Jan 27 0%–0.25% Mar 16 0%–0.25% Apr 28 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Jan 27 1% Mar 16 8% Apr 28 15% This blog entry is an advertisement for Max Leaman. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is copyrighted by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. Š 2009 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company (NMLS #: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NY, NC, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Licensed by the Arizona Dept. of Financial Institutions-license #BK 0907334; California Department of Real Estate-license ID #01857468; California Department of Corporations- license #4130996; Connecticut Department of Banking-license #ML-13649; District of Columbia Department of Insurance, Securities and Banking- license #MLO13649, Illinois Dept. of Financial and Professional Regulation-license #MB.6760635; Indiana Dept. of Financial Institutions- license #11169; Maine Dept. of Professional & Financial Regulation-license #SLM8285; Maryland Dept. of Labor, Licensing & Regulation-license #11058; Massachusetts Division of Banking- license # MC5404, Michigan Dept. of Labor & Economic Growth-license #FR 0010163 and SR 0012527; Nevada Dept. of Business and Industry, Division of Mortgage lending-exempt license #732; New Hampshire Dept. of Banking- license #14553-MB; New Jersey Dept. of Banking and Insurance-license #0803658; New Mexico Regulation and Licensing Dept., Financial Institutions Division-license #01890; North Dakota Dept. of Financial Institutions-license #MB101786; Tennessee Dept. of Financial Institutions-registration #4023; Texas Regulated Loan License-license #7293; Vermont Dept. of Banking, Insurance, Securities and Health Care Administration- lender license #6127 and broker license #0964MB; Washington Dept. of Financial Institutions-license #520-CL-49075; Wisconsin Department of Financial Institutions-license #214170. NMLS# 151263

No Change from Fed

In a week full of major economic news, mortgage rates ended with little change. Wednesday’s Fed meeting produced little reaction in mortgage markets. The PPI inflation report was higher than expected, but the more closely watched CPI report was right on target, remaining at low levels. Economic troubles in some developing nations produced a flight to safer assets, which helped mortgage markets late in the week. As expected, the Fed held the fed funds rate steady and made no indication that it will raise this rate any time soon. Its statement contained no surprises. Of note, it described improvement in the job market since the last FOMC meeting, as the “deterioration in the labor market is abating.” The Fed expects inflation to remain low. Finally, the statement reminded investors that the $1.25 trillion mortgage-backed securities purchase program will conclude at the end of the first quarter of 2010. Mortgage investors were generally pleased that there was no unfavorable news from the Fed meeting. The housing sector data released during the week was mostly favorable. November Housing Starts rose 9%, and Building Permits, a leading indicator, showed similar results. The December NAHB Homebuilders Sentiment index surprisingly dropped slightly, to the lowest level since June. Given the passage of the extension and expansion of the homebuyer tax credit, the index was expected to rise. Week Ahead Before the holiday next week, a significant amount of economic data will be released. Existing Home Sales and the final reading for third quarter GDP will come out on Tuesday. Wednesday will be the biggest day with New Home Sales, Core PCE inflation, Personal Income, and Consumer Sentiment. Durable Orders will be released on Thursday. In addition, the Treasury will announce the size of upcoming auctions on Wednesday. Mortgage markets will be closed on Friday in observance of Christmas.

2 Reasons to Buy a Home Before Year-End: Watch for a hike in interest rates and take advantage of the Homebuyer Tax Credit

Important year-end developments…

A couple of important news items for anyone thinking of buying or re-financing a home…

1. The Homebuyer Tax Credit Has Been Extended and Expanded. Now first-time homebuyers can qualify for a tax credit if they have a binding contract on a home in place by April 30, 2010—and they close by June 30. Buyers who have not owned a home during the last three years get a tax credit up to 10% of the home price, up to $8,000.

PLUS… The tax credit is now available to existing homeowners who have lived in the same principal residence for five consecutive years during the eight-year period that ends when the new home is purchased. The same deadlines apply, but the tax credit for these “move-up” buyers is capped at $6,500.

Finally, income limits to qualify are now higher. The tax credit phases out for individuals with modified adjusted gross income between $125,000 and $145,000 and between $225,000 and $245,000 for people filing jointly.

A tax credit is a direct reduction of your income tax. After calculating what you owe, you deduct the tax credit from that amount. As with all tax matters, be sure to consult a qualified, professional tax advisor.

But don’t procrastinate! April 30 isn’t far off and it takes time to find your dream home, so work with a good realtor (I can provide excellent referral if needed). And don’t cut corners. Be sure the new home fits your needs and budget and have a professional home inspection. Save time by getting pre-qualified for a mortgage by contacting me as soon possible.

2. Watch for a Hike in Mortgage Rates. Mortgage rates have been at historically low levels because the Federal Reserve, our country’s central bank, started a huge program to buy mortgage bonds, raising their prices and bringing mortgage rates down. This $1.25 trillion buying program will end March 31, 2010. After that, experts tell us mortgage bond prices will likely go down and mortgage rates will then head up.

Estimates are the 30-year fixed-rate mortgage may get to 6%, versus the 5% and below-5% levels we’ve been seeing. Historically, this is still a great rate, but higher rates do reduce your buying power. A $300,000 mortgage at 5.02% has a payment of about $1,614 per month. At 6%, a payment that size lowers the mortgage amount to less than $270,000.

The critical point: People thinking of buying a home or refinancing need to act now!

Please let me know if I can be of help…. And have a great day!

This e-mail is an advertisement that was sent to you because of your relationship with Max Leaman. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is copywritten by PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. PrimeLending, A PlainsCapital Company is an Equal Housing Lender. © 2009 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, a PlainsCapital Company (NMLS #: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AL, AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NY, NC, OH, OK, OR, PA, SC, SD, TX, UT, VA, WV, WY. Licensed by the Arizona Dept. of Financial Institutions-license #BK 0907334; California Department of Real Estate-license ID #01857468; California Department of Corporations- license #4130996; Connecticut Department of Banking-license #ML-13649; District of Columbia Department of Insurance, Securities and Banking- license #MLO13649, Illinois Dept. of Financial and Professional Regulation-license #MB.6760635; Indiana Dept. of Financial Institutions- license #11169; Maine Dept. of Professional & Financial Regulation-license #SLM8285; Maryland Dept. of Labor, Licensing & Regulation-license #11058; Massachusetts Division of Banking- license # MC5404, Michigan Dept. of Labor & Economic Growth-license #FR 0010163 and SR 0012527; Nevada Dept. of Business and Industry, Division of Mortgage lending-exempt license #732; New Hampshire Dept. of Banking- license #14553-MB; New Jersey Dept. of Banking and Insurance-license #0803658; New Mexico Regulation and Licensing Dept., Financial Institutions Division-license #01890; North Dakota Dept. of Financial Institutions-license #MB101786; Tennessee Dept. of Financial Institutions-registration #4023; Texas Regulated Loan License-license #7293; Vermont Dept. of Banking, Insurance, Securities and Health Care Administration- lender license #6127 and broker license #0964MB; Washington Dept. of Financial Institutions-license #520-CL-49075; Wisconsin Department of Financial Institutions-license #214170. NMLS# 151263

Sharp moves in either direction can occur at any time in low volume markets. That’s why it’s best to be extremely careful when locking in your interest rate

Economic news is coming from every angle. Kinda like Custer and his last stand. Developments started across the pond as S & P downgraded Greek debt, sending fixed income markets on a buying spree via flight to safety. That in turn sparked the dollar which rallied to 3 month highs, kicking the Euro’s tail and sending stocks on a tail spin. We see the dollar trade as a “short squeeze” as the world really hasn’t changed that much. When traders lean on a market as they have with the dollar, you get everyone on one side (short, betting the dollar will fall). Inevitably, the trade gets long in the tooth and something happens to reverse the trend (Greece). Short sellers must cover or get run over, causing what we call a “short squeeze”. Believe me, the unwinding of those trades are painful.

Next thing that happened on the way to the forum was Weekly Unemployment Claims jumping to 480K. Continuing Claims rose as well, up slightly to 5.19 million. Leading Economic Indicators were also on tap, up .9% versus market consensus of plus .7%. The good news in the report emphasizes an improving labor market and housing, with particular attention seen in builder attitudes. Bad news is this report is old news, rear view mirror type stuff which traders barely blink at. The Philly Fed rose 3.7 points this morning, better than the expected unchanged reading we were looking for. Ben Bernanke was also in the news, passing a Senate Banking Committee vote by 16-7. We have had a nice day, holding gains that started overseas and then made their way stateside. Oversold conditions helps boost treasuries and MBS along with fear in the Euro zone. We talked about this before but let’s cover it again. Sharp moves in either direction can occur at any time in low volume markets. That’s why it’s best to be extremely careful when locking in your interest rate. Expect this kind of behavior to last until the new year.