Freddie Mac reported yesterday that after slowly rising for the past three weeks 30-year fixed rates dropped below 5 percent to 4.98 percent from 5.03 percent a week earlier. 30-year rates had been holding steady below 5 percent for close to a month.
This past spring 30-year rates hit a record low of 4.78 percent, but as rates stay low they are still encouraging people to buy a home or refinance their current mortgage.
To date, in an effort to lower rates on mortgages and to loosen credit, the Federal Reserve has poured $1.25 trillion into mortgage-backed securities. Furthermore, the first-time home-buyers federal tax credit of up to $8,000 has also certainly boosted the ailing housing market.
It was even reported yesterday that the number of signed contracts to buy previously occupied homes rose for the eighth straight month in September, while residential construction spending jumped up just shy of 4 percent, which is the largest gain in more than six years.
The House is expected to vote on a bill today that would extend the first time home-buyers tax credit and will expand it to include buyers who already own homes. The Senate passed the bill yesterday.
The expanded federal tax credit bill will mandate that buyers will have to have owned their current home for five years or more in order to be eligible for a tax credit up to $6,500.
As for the first time home-buyers tax credit, there have been a few changes made to it and they include a stipulation that in order to qualify, buyers must sign a purchase agreement by April 30, 2010 and the property must close escrow by June 30, 2010.
Lenders remain cautious while keeping standards tight, therefore the best low rates will only be available to borrowers with good solid credit and who are able to provide a 20 percent down payment.