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October Round Up: Rates Stay Flat
In Freddie Mac's results of its Primary Mortgage Market Survey (PMMS) the 30-year fixed-rate mortgage (FRM) averaged 5.03 percent with an average 0.7 point for the week ending October 29, 2009, up from the previous week when it averaged 5.00 percent. Last year at this time, the 30-year FRM averaged 6.46 percent.
The 15-year FRM this week averaged 4.46 percent with an average 0.6 point, up from the previous week when it averaged 4.43 percent. A year ago at this time, the 15-year FRM averaged 6.19 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.42 percent this week, with an average 0.6 point, up from the previous week when it averaged 4.40 percent. A year ago, the 5-year ARM averaged 6.36 percent.
The one-year Treasury-indexed ARM averaged 4.57 percent this week with an average 0.6 point, up from the previous week when it averaged 4.54 percent. At this time last year, the 1-year ARM averaged 5.38 percent.
"Interest rates for 30-year fixed mortgages have averaged just below 5 percent this year, which is the lowest 10-month average since the survey began in 1971," said Frank Nothaft, Freddie Mac vice president and chief economist. "As a result, refinance activity has accounted for almost seven out of 10 mortgage applications on average this year," according to Freddie Mac's survey.
"Economic data releases this week offered mixed signals as to the current state of the housing market. For example, total existing home sales jumped 9.4 percent to an annualized rate of 5.57 million homes in September, the strongest pace since July 2007, according to the National Association of RealtorsŪ. However, new home sales unexpectedly fell 3.6 percent to 402,000 houses, the weakest since June of this year, based on figures from the Department of Commerce. Nonetheless, stronger housing demand has lowered the inventory of unsold existing homes in September to the lowest since January of this year and for new homes the lowest since November 1982, which should help stabilize falling house prices."
Homebuyer's Tax Credit Extension
The Senate now appears likely to pass a bipartisan compromise extending and expanding a tax credit for homebuyers.
The deal would extend the $8,000 credit for first-time homebuyers for sales contracts entered into by April 30, 2010, and closed within 60 days. It would also add a $6,500 credit for some owners of existing homes as long as they have been in their homes for five consecutive years in the past eight.
The income cap would be raised to $125,000 for individuals and $225,000 for married couples, up from $75,000 and $150,000, respectively. An earlier version of the compromise would have increased the cap to $250,000 for married couples.
Value of Remodeling Projects Up
The value of remodeling projects nationwide increased 20 percent in the second quarter compared to the same quarters of both 2007 and 2008, according to a Remodel or Move survey of remodeling permits.
Remodel or Move said the increase followed an earlier report that identified 5 percent of homeowners who said they planned to remodel in the time period. Most of the remodeling activity was in the Northeast and the Southwest. The rest of the country hasn't seen much recovery, the survey found,
Authors of the report speculate that more people are spending money on remodeling projects because of declining costs and government stimulus payments.
Taking Advantage of Tax Incentives
If you're considering a major purchase like an energy-efficient home improvement or a new car, there are tax incentives available that can help you offset your costs by reducing your federal income tax liability.
Home Improvements: Tax credits of up to $1,500 are available to taxpayers who make certain energy-efficient home improvements that are placed in service by December 31, 2010.
The improvements must be made to the taxpayer's principal residence, with tax credits available at 30 percent of the cost - up to a maximum total of $1,500 - for the following products:
Windows and Doors
Insulation
Roofs (Metal and Asphalt)
HVAC
Water Heaters
Biomass Stoves
There is no income limit for the energy-efficient tax credits; however, they are "non-refundable" which means you can't get more money back in tax credits than you pay in federal income taxes. For more information on these tax credits, visit www.energystar.gov/taxcredits.
New Car Tax Deduction: Taxpayers who purchase a new car, light truck, motor home or motorcycle after February 16, 2009 and before January 1, 2010 can deduct the state and local sales and excise taxes paid on their purchase from their 2009 federal income tax.
The deduction is limited to taxes paid on vehicles with a purchase price up to $49,500; if you buy a more expensive vehicle, you can deduct only the taxes paid on the first $49,500 of the purchase.
Unlike a tax "credit", the new car tax deduction reduces your taxable income - rather than your income tax due. This deduction starts to phase out for single taxpayers whose adjusted gross income exceeds $125,000 and married couples whose adjusted gross income is more than $250,000. For more information on the new car tax deduction, visit www.irs.gov.
Remember to consult with a tax advisor regarding your eligibility for tax credits and deductions.
Written by Realty Times Staff
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