Nick Timiraos reports:
The $15,000 homebuyer tax credit didn’t survive the final negotiations on the stimulus bill. Instead, Congress slightly increased to $8,000 an existing $7,500 credit for first-time homebuyers and eliminated repayment provisions.Congressional negotiators said that $8,000 number isn’t yet finalized.
The move was sure to disappoint those who had favored a more generous $15,000 credit for all home buyers in the Senate bill.
The new credit is retroactive to Dec. 31, 2008, which means that anyone who buys a house this year, through August, won’t have to repay it. First time buyers who used the credit in 2008 still have to pay it back over a 15-year period.
The real-estate industry had closely followed the tax credit debate, hoping that a larger credit would make potential buyers more comfortable at a time when declining values and rising job losses have scared off buyers.
Without a larger tax credit, some say more action is needed. “Washington needs to do more at compensating home buyers for the now considerable danger of yet lower home prices,†writes John Lonski, chief economist at Moody’s Investors Service. “The near-term stabilization of either the economy or the financial system may be impossible until the now 5.25% 30-year mortgage yield falls to something no greater than 4.5%, and even the latter may prove to be too costly.â€
Interest rates edged up slightly at the end of January, and mortgage applications for new homes fell 14% during the four week period ending Feb. 6 from the previous four weeks.
Readers, does the slimmed down tax credit change your home buying plans?
