Specializing in Savannah & the Surrounding Islands

Early last week, a forecast from the Fed that inflation should remain low for the next couple of years moved mortgage rates lower. Inflation is enemy #1 for mortgage rates. The economic news later in the week was less favorable for mortgage rates, however. Strong earnings reports produced a rally in the stock market, which pushed mortgage rates higher. In the end, mortgage rates finished the week essentially unchanged.

In testimony before Congress on Tuesday, Fed Chairman Bernanke provided an update on the Fed's outlook for economic conditions. Of note, Bernanke predicted that inflation will not be a concern any time soon, which was good news for mortgage rates. While he expects economic growth to turn positive later this year, he suggested that the labor market may be weak for several years. As a result, the fed funds rate will likely remain near zero for "an extended period".

The June Existing Home Sales report contained positive news for the housing market. In June, Existing Home Sales rose for the third straight month, climbing 4%. The inventory of unsold existing homes fell to a 9.4-month supply from a 9.8-month supply in May. The national median home price rose 4% from May. According to the National Association of Realtors (NAR), home sales were helped by the first-time homebuyer tax credit and "historically high affordability conditions".

First-time homebuyers accounted for 29% of all transactions in June. We are down to just 4 months left of the federal housing tax credit. It would be a shock to the system if this credit were not to be extended. My guess is we will not here much talk about the extension until we get closer to the date. Until there is official notice from the Fed that it will be continued, one should act as if it will end on Dec 1^st as scheduled. Remind your buyers that they need to be CLOSED by Dec 1^st and not just under contract.

Rate Update:

30 yr fixed Conventional FHA VA – all are at 5.25%

30 yr fixed USDA is 5.0%

"With careful and detailed planning, one can win; with careless and less detailed planning, one cannot win. How much more certain is defeat if one does not plan at all! From the way planning is done beforehand, we can predict victory or defeat."

Michael J. Caputo

Bank of America Home Loans
MLO Sales Manager
Cell: (912) 658-1595
EFax: 866-425-2812
Michael.Caputo@bankofamerica.com

" We will always be a responsible lender and we will enable you to be a successful homeowner."

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