When it comes to the housing market, the most important day in April wasn’t Tax Day, but April 30.
That deadline marked the end of the federal government’s $8,000 tax credit for first-time homebuyers and the $6,500 tax credit for repeat homebuyers. There is one exception — if you’re a member of the armed services and you were overseas on active duty for a period of 90 days between Jan. 1 and May 1, you earn a one-year extension.
Otherwise, the deadline means that if you have a binding sales contract signed by April 30, you have until June 30, to close the deal — otherwise you could lose that lucrative tax credit.
Now, on to the current mortgage rate picture. By and large, mortgage rates inched up a bit, with the exception of the 30-year fixed-rate mortgage. Mortgage rates may have felt (and might continue to feel) the impact of the Federal Reserve’s shutdown of its $1.3 trillion mortgage security buyback program.
Right now, the 30-year fixed mortgage rate sits at 5.212%, as measured by the BankingMyWay Weekly Mortgage Rate Tracker. Last year at this time, the average rate sat closer to 4.85%, thus suggesting a slow but steady rise in mortgage rates that should go even higher as 2010 progresses. One note: realtors and mortgage brokers don’t put a lot of stock in year-to-year shifts in mortgage rates and housing prices — they focus on monthly changes instead. But the 40-basis point rise in rates from April 2009 to April 2010 does give homebuyers a sense of where the rate market has been and — presumably, if most economists are right — where it’s headed in the next few months, and that’s upward.
Feeding that sentiment was last Friday’s report from the U.S. Commerce Department that the U.S. economy grew by a rate of 3.2%. That’s the not the 3.4% rate that economists had expected, but it’s still a hopeful sign that the economy can live without the stimulus spending the government shelled out in 2009. Studies show that the stimulus package didn’t have much of an impact on the economy, anyway, so now the hope is that the U.S. is increasingly self-sufficient, and that consumers will wake up and start spending.
That’s pretty much what happened in March, as Commerce Department numbers showed that U.S. consumers rose by 0.6% in March — the highest level in five months. As consumer spending comprises about 70% of the overall U.S. economy, that should spur even more economic activity, especially key drivers like housing starts, housing sales and employer hiring.