HUD has announced again that FHA will allow the $8000 first time home buyer credit to be applied directly towards home purchase costs. In typical HUD fashion, we have no other details, but will let you know as soon as we learn more.
Interest rates spiked earlier in the week and sent the 30 year fixed rate up from 4.875% to 5.50%. There are a lot of reasons stated for the spike, many of them complex, but it seems to be mostly due to the over supply of Treasuries. According the Mortgage Market Guide " The Treasury has literally been printing money by way of Treasury auctions to pay for the massive spending. And these hundreds of Billions of dollars of new Bond supply have to be absorbed by the market, the additional supply literally weighs on the entire Bond market and drags prices lower (which ultimately increases yields and interest rates)"
There is also an over supply of Mortgage Backed Securities due to the record amount of refinances which also has to be absorbed by the market. The Fed has been a buyer which they committed to at the end of 2008. This action by the Fed initially brought mortgage rates down, but they simply can't buy enough to balance all of the selling.
Because of the over supply issue, there is speculation that we may not see rates go back to the lows we have experienced over the last few months.
We are seeing a welcomed rally in the Bond/Treasury market so far today, and hope to see rates ease a little.