Home-Buyer Tax Credit is Extended While Mortgage Rates and Housing Prices Fall: Now is the Time to Buy
Mortgage rates have fallen. Housing prices have fallen across the country. The federal government will pay you as much as $8,000 just to buy a home by April.
If you’re thinking of moving up to a larger home, this is the time to buy. If you’re a first time home buyer, what are you waiting for? It’s time to call a Baltimore Realtor.
The average 30-year fixed-rate mortgage was 4.91 percent in the week ending Nov. 12, the lowest in five weeks. A year ago, 30-year mortgages were averaging 6.14 percent.
A 15-year fixed-rate mortgage averaged 4.36 percent in the week ending Nov. 12, remaining below one-year adjustable rate mortgages, which now average 4.46 percent.
“This [mortgage rate decline] comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up,” said Freddie Mac chief economist Frank Nothaft in a recent Baltimore Business Journal article.
That means these extraordinarily positive conditions for home buyers aren’t likely to last much longer.
There’s yet another reason for Baltimore home buyers to act. The economic stimulus bill that President Obama signed in February funded a $8,000 tax credit for first-time homebuyers through Nov. 30. Largely as a result, first-time buyers accounted for a record 47 percent of all home purchases nationwide so far this year, according to the National Association of Realtors.
This month, the President signed a measure to extend the credit to homes that are under contract by April 30, 2010, and to create a $6,500 tax credit for owners of existing homes who buy a new principal residence. (For details, see my recent blog posts, “Now Current Homeowners and More First-Time Buyers Can Get Tax Credit” and “12 Important Things to Know about the Home Buyers Tax Credit“)
Aided by the home buyer tax credit, the outlook for housing and the economy appears headed for a sustainable recovery, NAR said. Existing-home sales are expected to total 5.01 million in 2009, a gain of 2 percent over last year, and then are forecast to rise 13.6 percent to 5.69 million in 2010, according to NAR.
Don’t wait any longer. The 30-year fixed-rate mortgage will probably average 5.3 percent in the fourth quarter, rising gradually to 5.8 percent by the end of next year, NAR said, adding that its housing affordability index will set a record in 2009, averaging 30 percentage points higher than 2008. Affordability will decline from record highs next year but will remain at historically attractive levels for home buyers.