The Fannie Mae 30-Year Fixed mortgage rates did improve slightly this week to 6.375%, down from 6.5% last Friday. One of the reasons for improving mortgage rates this week is that the initial jobless claims increased by 44,000 to a total of 448,000 which was higher than expected and is at a 5 year high. Tomorrow the unemployment rate and non-farm payroll report will be announced and could have a strong impact on mortgage rates. "WATCH THE NEWS"
President Bush signed the housing rescue bill this week that was approved by Congress last week offering mortgage relief for 400,000 struggling homeowners who are facing foreclosure. This bill also offers a temporary financial life-line to the troubled mortgage companies Fannie Mae and Freddie Mac whose recent losses have been causing mortgage rates to rise due to investor fears.
Thanks to this bill, first-time homebuyers will get a tax credit of 10 percent of the purchase price, up to $7,500. The law defines a first-time homebuyer as someone who hasn't owned a home in three years. Although this tax break is great for homebuyers right now the money has to be repaid over a 15 year period. They will get the credit through a refund on their 2008 taxes. Then the bill comes due two years later, when one-fifteenth of the amount has to be repaid each year for 15 years. This credit is good until June 30th of next year.