Editor’s note: This article is reposted with permission by The Real Deal. Click here to view the original article.

By AMY TENNERY

Editor’s note: This article is reposted with permission by The Real Deal. Click here to view the original article.

By AMY TENNERY

While the first-time homebuyer tax credit program is set to expire April 30, it could end up affecting housing statistics for weeks to come. That’s because homebuyers have until June to close on properties if they sign contracts by next Friday.

The program, extended from last fall, offers up to $8,000 to first-time buyers and $6,500 to repeat buyers.

The credit could result in a continued, artificially-created increase in the rate of mortgage application filings, which showed a 13.6 percent uptick for the week ending April 16 according to seasonally adjusted week-over-week data released today from the Mortgage Bankers Association.

The average 30-year mortgage rate, meanwhile, dipped to 5.07 percent from 5.17 percent, according to the MBA’s report.

Michael Fratantoni, vice president of research and economics with the MBA, told The Real Deal that while this week’s uptick in mortgage application volume can be attributed to a confluence of factors — including a dip in mortgage rates and the end of the Easter holiday — the homebuyer tax credit likely influenced figures.

And this uptick could continue through the spring, Fratantoni said.

"(We forecast) something of an increase in the second quarter but we’re going to be paying back for that in the third quarter," Fratantoni said of mortgage application volume. "The time between when a borrower files the application and (a) home sale occurs is about four to six weeks."

As for the New York City market, Noah Rosenblatt, a market analyst and founder of UrbanDigs.com, said that "there is a sense of urgency" right now that will be reflected in the data in the tax credit’s wake.

"Clearly you (have) some pent-up demand," Rosenblatt said, noting that people’s optimistic attitude toward the New York market could push mortgage apps up through the spring.

As for South Florida, Rosenblatt argued that the time to make a home purchase was in December, when rates were at historic lows. He suspects the trend leading up to the tax credit’s expiration will be similar in Miami and New York. 

He said people should keep in mind that an "artificial, weak foundation led to the improved (mortgage) data."

But the tax credit’s expiration this time around is likely to have a less dramatic effect nationwide than it did in the fall, when buyers flocked to the market to make the deadline, according to the MBA’s Fratantoni.

While he sees a "greater volatility" in mortgage rates through the summer, Fratantoni said he expects the mortgage market to withstand the withdrawal of the federal support programs.

"I think it is a natural progression … to more of a typical environment," Fratantoni said. "The economic recovery has taken hold now, we’re seeing improvements."

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×