Since the Fed meeting on Wednesday of last week, Austin mortgage rates have improved a little each day. There was no major economic data released during the week, and even a weak 30-yr Treasury auction on Thursday failed to stall the rally in mortgage markets. As a result, Austin mortgage rates ended the week moderately lower.
At their last meeting, the Fed indicated that monetary policy would remain on hold for quite a while. While the Fed acknowledged that it will eventually have to raise the fed funds rate, the message was clear that rate hikes are still a long way off. A series of Fed speakers this week elaborated upon their current thinking. A solid majority of Fed officials feel that the economy is still too fragile and the labor market is too weak to begin to raise mortgage rates. Confirmation that rate hikes are a long way off encouraged investors to purchase stocks and mortgage-backed securities (MBS), and both equity markets and mortgage markets have performed very well since the Fed’s announcement.
On Friday of last week, President Obama signed into law an expanded Homebuyer Tax Credit bill, which extended the deadlines and added a new $6,500 credit. Several provisions in the bill became effective immediately. Homebuyers who owned their primary residence for five out of the last eight years can claim the $6,500 tax credit for purchases made after November 6th. In addition, the extended income limits in the bill are now applicable for both first-time homebuyers and repeat homebuyers. The extended income limit for couples filing jointly is now $225,000, with the credit phased out over the next $20,000 in income. These new limits cannot be applied retroactively to deals completed before November 7th.