I don’t know who pays attention to stocks but there is usually an inverse relationship between stocks and mortgage bonds. When stock are blowing away milestones like they are today, mortgage bonds take a hit. This occurs as investors seek yield, it is a constant flight to higher returns. Mortgage Interest Rates are heading higher with the soaring DOW.
The DOW had never hit 24,000 until today and it is blowing right by that, sitting firm at 24,250. Why are stocks up? Like it or not, a lot has to do with who took over the White House last November. Do not send me any political commentary. The Dow is up almost 23% year to date. The tax reform bill that is soon to be voted on in the Senate is gaining support (McCain just said he is on board) and the market seems to be pricing in a favorable expectation of passage.
What does this mean to our families we help? Mortgage Interest Rates are (have been) climbing. The price right now could easily be worse 25-30bps from the price we quoted yesterday afternoon. In some cases that is an 1/8 increase to rate, it happens that quick. Don’t be caught with a Thanksgiving hangover, make sure you are giving the best advice possible to your Home Buyers and Sellers today, and let them decide what is right for them.
Again, part of this rise could be coming from the fact that Investors are happy about the new Tax Reform Proposed changes. The proposed Federal Tax Reform Program, if left as it is drafted in H.R.1, will eliminate a program that helps more than half of our customers qualify to buy the home of their dreams. We focus our business on First Time Home Buyers, and the proposed Tax Reforms from Congress that go into effect 1/1/2018 eliminates the Mortgage Credit Certificate Program (MCC) nationwide.
The Senate Bill leaves the Mortgage Credit Certificate in place, however, the House and the Senate must agree on a final plan, and at this time, it appears this valuable tool could easily be lost – giving first time home buyers a double wammy… Higher mortgage interest rates, and diminished buying power without the MCC.
This program is often referred to by first time home buyers atMortgage Tax Credits. It is offered in every state, and was created under Tax Reforms initiated by President Reagan. In a Statement from the NC Housing Finance Agency they advised:
The current draft of the tax legislation (H.R.1) will impact the availability of affordable housing programs serving both home ownership and rental markets. Should the tax legislation pass as proposed, it will eliminate the ability of housing finance agencies to issue Mortgage Credit Certificates on loans after 12/31/2017… As such, lenders using the MCC program are advised to have all loans closed no later than December 20 and MCC closing package uploaded to NCHFA no later than 12/24/2017.
With the new Republican Congressional Plan, this entire program goes away, and effectively, the Mortgage Deduction with it. BOTTOM LINE: if you want to qualify with a for home with the MCC program, APPLY NOW! We must have the loan closed by December 20, 2017 to guarantee the program will be available. Mortgage Credit Certificate Program and Tax Reform are very sensitive issues for us.
The program is currently in the House Version of Tax Reform, but not in the Senate Version – it could be repealed… but for that to happen, more people are going to need to let Congress know it’s an important issue! Every Housing Industry Trade Group thinks this is going to be another blow for Housing, leading to a housing recession.
If you have questions about Mortgage Credit Certificate Program, Mortgage Interest Rates and Tax Reform, or you want to see how this might change the pre-qualification you received for a mortgage, please call Steve and Eleanor Thorne 919 649 5058.
Originally Posted at NCFHAExpert.com