Firstly, the full deduction is only available to those who make $100,000 or less.  Also, and this disqualifies so many in that category, it doesn't help if the taxpayer doesn't itemize and instead takes the standard deduction.  The article I read on it quotes an economist (yes, they even do this simple folk practical kind of math sometimes) as determining that this requires a loan of at least $130,000 (to have enough interest expense to make itemizing more valuable than taking the standard deduction) and also that this then makes this really only available to people that make between $50,000 and $100,000 (implied but not stated in this last bit is that anyone making less than $50,000 can't qualify for or afford a mortgage over $130,000).  At least nobody can say that this administration isn't doing anything for the "average Joe", since that's clearly who benefits most from this legislation.

The mortgage insurance industry supposedly thinks this will save American homeowners $91 million next year.  Based on the framework of my last paragraph, I highly doubt it.  That said, for someone who fits within that framework, there is not only a benefit, but a very important consideration for how to finance a home, whether a new home a refinancing:  it may be more cost effective now to do a 90% LTV loan than an 80/10 structure that avoids the mortgage insurance by keeping the first mortgage under 80% (the threshold at which mortgage insurance becomes required by the lenders).  For those who have clients putting very little down (5%, 10%, 15%) this is something to make sure they explore, before their mortgage guy just puts them into a less tax efficient 80/10 or similar structure.  Of course, if you are a mortgage broker, this is a good thing to present to your clients to look smart and save them money, and maybe even save yourself some hassle by just doing one loan instead of two.

By the way, the law has to be renewed next year to be in effect for 2008, so there is a risk, even for those that do qualify, that if the law isn't renewed for some reason and they are a year from now in a loan with mortgage insurance based on this calculation, that they are stuck (interest rates are likely going to be higher) with no more deduction and a loan they would have done differently.  I think it seems likely to be renewed, but I don't know if I would feel as good about it if I was in the category of those that make a decision based on getting this deduction.