The hot topic around the web yesterday was that February’s increase in homebuyer activity was the result of the pending expiration of the homebuyer tax credit.

According to the National Association of Realtors, “The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.”

The big question: Is February’s boost in homebuyer activity enough to spur lawmakers to extend the homebuyer tax credit again? The numbers for February’s pending home sales were only first available yesterday, April 5. That means March’s (pending home sale) numbers won’t be available until the beginning of May. By that time, all who wanted to take advantage of the homebuyer tax credit would have had to have their contracts signed — all contracts must be signed by April 30 (24 days away). We will, however, see some of February’s numbers expressed in March’s existing-home sales report due out on April 22.

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Today, April 1, is day one in the mortgage market’s expedition into uncharted territory — uncharted in the sense that mortgage rates have been corralled by the Fed’s MBS-purchase program for well over a year now.

The big question — the 800-pound gorilla in the room, if you will — has been, “what will happen to mortgage rates now that the Fed has stepped out of the picture?”

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We’ve been stirring the pot about another possible extension to the homebuyer tax credit (HBTC) for over a month now. With just 30 days left for homebuyers to shop, lock (in a rate) and sign a contract, it’s beyond crunch time.

While earlier today I was thinking that the chatter surrounding another possible extension of the HBTC was rather muted, the numerous articles I read on the subject shortly thereafter made it appear that I wasn’t entirely correct.

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A lot has changed since December 2009 when we wrote both our last two-month forecast and our 2010 Outlook for mortgage rates. We decided to delay the release of the February two-month forecast in order to give us some more time to consider the changes that were and still are forming in the mortgage market. Although delayed, we have published the latest Two-Month Forecast for Mortgage Rates.

At the dawn of the new year, the Fed was slated to move forward with their plan to end their mortgage-backed security (MBS) purchase program on March 31, 2010 — a plan that for nearly 16 months drove mortgage rates down to record lows. At that time, there was no other plan in place to pick up where the Fed’s plan would leave off. However, a lot has changed in three months.

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Through the first three months of the year, the answer so far is “no,” says the National Association of Realtors (NAR).

After writing a post yesterday on the homebuyer tax credit — asking readers just how well they know the tax credit — the question popped into my head: “I wonder how successful the tax credit has been this year in comparison to last year?” I got an answer from one source.

From National Mortgage News (emphasis added): Read the rest of this entry »

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“As expected, the recent slide in mortgage rates came to a soft halt [last] week,” according to the latest issue of HSH.com’s Market Trends Newsletter. As stated in the release immediately following their two-day meeting, the Federal Reserve maintained that their MBS purchase program would end as planned on March 31, 2010. Despite the fact that many (including us) foresee a legitimate rise in rates when that program ends, rates held steady for the most part:

[Last] week, the overall average for 30-year fixed-rate mortgages tracked by HSH.com’s FRMI rose by a single basis point (0.01%) to 5.42%. The FRMI includes conforming, jumbo and the GSE’s “high-limit” conforming products in its calculation. It also has a Hybrid 5/1 ARM counterpart, which shed six basis points during the latest survey cycle, landing at 4.59% for the week. Conforming 30-year fixed mortgage rates eased by a couple of basis points while jumbos moved a like amount upward.

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Good morning everyone. Since there are several important developments currently underway that are likely to impact you directly, I thought I would do things a little different this morning. Instead of writing separate posts on each development, we’re going to delve a little into each. Each of the following are likely to impact not only the housing markets but the overall economy as well.

Fed Leaving the Mortgage Market?

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We couldn’t agree more with John Canally, an economist at LPL Financial, when he said that the Fed is walking a pretty narrow tightrope in 2010.

The Fed’s decision to purchase Fannie and Freddie mortgage-backed securities (MBS) has been extremely successful at lowering conforming mortgage rates to 50-year lows, and driving potential buyers into the market.

But what makes the Fed’s tightrope especially narrow in 2010 is that the program is due to expire in the next few months — and there’s dissension in the Federal ranks over whether or not to extend it.

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It was one year ago today that the Federal Reserve announced their plan to “reduce the cost and increase the availability of credit for the purchase of houses” On November 25, 2008 the Fed decided to support Main Street and the mortgage market by committing their first round of purchases to Fannie and Freddie mortgage-backed securities (MBS).

While it was only a year ago, it has been interesting to look back at the Fed’s announcement as well as our blog posts and see if the Fed’s original goals were met and if the program succeeded as intended.

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