SF New Developments

The expected extension and expansion of the tax credit (probably the last one), is expected to be voted on as soon as today and probably signed in the next few days, at best. The signing may happen in spite of the administration preferring a slightly different version. The latest, not voted on by the Senate, would extend the credit to home sales that go under contract by April 30 and close by June 30, 2010. A new, $6,500 tax credit would be available for buyers of owner occupied primary residences who have owned during five of the eight years prior to the purchase. Although the House may have its own version, this extension includes a few items such as the home price limit would be $800,000, and the annual income limit to qualify for the tax credit would be $125,000 if you’re single and $250,000 for couples.

The other pieces of the puzzle are the loan limits. Appropriations committees in the House and Senate are proposing to extend the temporary limits for conforming jumbo loans, keeping the $729,750 loan amount through 2010 in some markets. If San Francisco does not qualify, I don’t know what market will. The committees recognize that the government must do what it can to not de-stabilize the housing markets, and are thus recommending this action. At this point there is no reason not to extend the limits, it just hasn’t been done yet.

For the week ending on October 28th (yes, they ended their week in the middle of the calendar week) the Federal Reserve’s MBS program was a net buyer of $18 billion agency MBS, which was the similar to last week. For the year purchases of agency MBS stand at $977 billion. Recently the Fed has had an appetite for 30-year 5.0s and 5.5s (which include 5.25-6.125% mortgages). The Federal Reserve finished its $300 billion Treasury purchase program yesterday, and at this point the mortgage purchase program will end in March.

Bond prices went down and rates went up, the equity markets saw some nice gains, oil moved above $80 per barrel again, and the 7-yr auction went nothing like the 2 & 5-yr sales from Tuesday and Wednesday. Was all that due to a slightly-stronger-than-expected GDP number? Some of it was, although analysts quickly point out that a good portion of the increase is due to government spending (ergo not sustainable).

Fortunately for mortgage rates, relative to Treasury yields, locks and supply are down somewhat and there is decent demand for new production, so mortgage rates did better than other yields. The major earnings announcements are behind us, and many companies feel that they are done cutting costs and now are hoping for actual revenue growth. Imagine that!

Most of the United States begins Daylight Saving Time at 2:00 a.m. on the second Sunday in March and reverts to standard time on the first Sunday in November. So by my calculations, that means that this Sunday here in the U.S. most of us “fall back” and it will dark by dinner time.

Slow day, click on this link if you want some giggles. FHA is becoming the new subprime.
http://www.youtube.com/watch?v=voEeubnGY58&feature=related

From Ryan Ogata’s blog www.ryanogata.blogspot.com

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