Late Wednesday, the Senate agreed to extend the existing tax credit for first-time homebuyers, while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years.
The existing tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers, the Associated Press reported.
Mortgage insurers were jumping on above-average volume following the news. Radian shares jumped 17.3% to $5.93, as volume of 5.3 million shares was greater than the three-month daily average of 3.7 million, according to Yahoo! Finance. MGIC rose 9.7% to $4.62, with volume of 6 million surpassing the three-month daily average volume of 4.5 million.Meanwhile, PMI Group (PMI) surged 23.5% to $2.31, as volume of 6.1 million shares topped the three-month average daily volume of 3.6 million. The jump in the mortgage insurers comes only a few days after Standard & Poor's Ratings put a handful of names on watch for downgrade because of a longer than expected loss cycle. "The CreditWatch placements reflect our view that macroeconomic conditions may have become more difficult for the mortgage insurers since we last conducted an extensive review of the sector in April," Ron Joas, an S&P credit analyst, said Tuesday. Even bond insurers Ambac Financial (ABK) and MBIA (MBI) were on the rise, due to their exposure to the mortgage market through securities, although volume wasn't outpacing the three-month daily average. Ambac jumped 12.8% to $1.15 and MBIA was climbing 8.7% to $4.37. Similarly, Triad Guaranty (TGIC) was higher by 15.6% to 74 cents, although volume of 63,000 shares was trending below the 50-day average daily volume of 335,000. -- Written by Robert Holmes in New York. Check out all of Thursday's high-volume, under-$5 stocks at the Dollar Store Follow Robert Holmes on Twitter and become a fan of TheStreet.com on Facebook.
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