Current Mortgage Rates: Time Home Buyer Tax Credit Extension

There are a multitude of factors that come into play when determining current mortgage rates. Many people believe that the Fed, or the Federal Reserve, directly controls mortgage rates, but this is not the case, at least not directly. The reason for this common misconception may stem from a misunderstanding of the Federal Funds rate. The Federal Funds rate is an interest rate which banks charge each other on overnight loans when a bank needs to borrow money to meet end-of-day reserve quota requirements.

Federal law states that a bank must have at least a certain amount of cash on hand at closing time at the end of the day. If a bank does not have the specified amount of cash available, they can borrow cash from another bank at a government suggested interest rate. Because the Fed merely suggests what that rate should be, it is called a target rate. The actual interest rate a bank may have to pay is negotiated between banks.

Higher priced homes not attainable to most first time home buyers- This tax credit has been very influential in recharging the economy, stabilizing housing prices, helping to alleviate some of the foreclosed properties on the market since the foreclosed homes contribute to real estate prices declining. What I have read is although the current 8k tax credit has been an incredible stimulus to the housing market. it has mainly affected lower priced homes less than 200k. There are a lot of higher priced homes which are being foreclosed on and need some type of help to get buyers to start purchasing them. The stabilization of the higher priced properties are essential to the economic recovery and may not be a feasible option for 1st time home buyers.

Current Mortgage Interest Rates Remain At Historic Lows- If you were not paying attention yesterday, current mortgage rates were treading lower throughout most of the day. Freddie Mac released the average 30 year fixed mortgage interest rate was 5.04 for the week before. As we all know, current mortgage interest rates are at historic lows. While no one has a crystal ball and can predict which direction current mortgage interest rates will go in the near future, they have been slowly, steadily treading lower over the last couple of months.

Also it has been reported home prices are at their most affordable levels in a few years. While home prices have been declining (which is great news for home buyers) it was just reported that home values have increased 2% for the second quarter, which is great news for everyone. Add in the tax credit you have an unbelievable opportunity if you are a first time home buyer.

Learn more about Obama Mortgage Relief Plan Qualifications.