Low rates, greater affordabilty and tax credits

Mortgage rates equal all time low and tax credit extentions

The average rates for 30-year mortgages fell this week, matching a record low set last spring and more than a full percentage point below what they were a year ago, Freddie Mac said Wednesday. Rates for 30-year mortgages averaged 4.78 percent this week, down from 4.83 percent last week and equaling the record low reached the week of April 30.

Freddie Mac has been tracking rates on 30-year fixed mortgages since 1971. Last year at this time, the 30-year fixed-rate mortgage averaged 5.97 percent.Rates for 30-year fixed mortgages are 0.8 percentage points below this year's peak set in mid-June. Refinancing at the current rate shaves roughly $100 off monthly payments on a $200,000 mortgage, said Frank Nothaft, Freddie Mac's chief economist.

Low mortgage rates, more affordable pricing and the expanded housing tax credit could make now an ideal time for those home owners considering moving-up to a larger more expensive home. The extended tax credit (up to $6,500) to current homeowners targets a more upscale segment of the market looking to move into a better home every seven or eight years. A five-year ownership requirement discourages people from flipping houses the way they did during the real estate bubble.

Remember, as a seller looking to move-up to a more expansive home (remaining in the same area) you might expect to see a similar percentage rate of devaluation of housing prices. Therefore, you might also expect to recieve a greater savings on the more expensive home purchase than any loss on the sale of your current home.

For more information on Freddie Mac, click here

For more information on the extended home buyer's tax credit, click here

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