Mortgage Rates Become Increasingly Volatile
If you’re a potential homebuyer looking to take advantage of the opportunity to “buy low” in this mess of a housing market, you may soon have about 15,000 more reasons to make the purchase. The Senate is currently wrestling with an economic stimulus package that could include major implications for homebuyers, including a $15,000 tax credit for anyone who purchases a home during a defined period of time. There is a current $7,500 tax credit for first time home buyers, but this credit would be redeemable by all homebuyers, regardless of age or financial background.
The proposed tax credit is one of many issues based on the goal of beginning a recovery in the housing market that could affect people purchasing homes. Other proposals include reducing mortgages rates to low levels such as 3.5% or 4% for a limited period of time to make investing in a home more attractive. Although it’s impossible to predict whether or not these proposals will end up in the final stimulus package, consumers considering the purchase of a home should be getting organized in case they need to make decisions quickly in order to take advantage of these incentives.
The uncertainty around mortgage programs over the past few weeks has caused rates to bounce around even more than usual. Over the past week alone, the average rate on a 30 year fixed mortgage has jumped from 5.48% to 5.70%, a difference of almost $30 a month on a $200,000 loan balance. Over the last several days rates on just about every type of mortgage have increased with the growing uncertainty. The volatility is expected to continue as the various alternatives that have been proposed are debated by lawmakers.
The only thing predictable about mortgage rates is that they are unpredictable, but there have been good opportunities to lock in very attractive rates over the last several weeks and the final decisions made by lawmakers could create a great opportunity to take advantage of low rates and tax incentives in the very near future. If you are on the fence about purchasing a home in this market, these proposed changes might be enough to persuade you to buy.
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Tags: home purchase, homebuyers, mortgage rates, tax credit, tax incentives
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