East Bay Mortgage Market Update-

Warren Buffett is known as the Oracle of Omaha, but Pimco’s Bill Gross is known as the Sage of the Bond Market.  His insight is typically accurate, and today he confirmed what many had been expecting: mortgage rates should be dropping to 4.5%.  In an interview on CNBC, Gross noted: “I think at some point we’re going to see a 4.5 percent mortgage rate and the 10-year Treasury rate capped at some level…when the Fed comes in to buy Treasuries that will be a big day.”

And while we’re talking about low mortgage rates, anyone reading this needs to let their voice be heard when it comes to the non-stimulus package.  It was chalk full of ridiculous spending items such as $700+ million in school lunches and $21 million to re-sod the National Mall in Washington.   The Senate package will likely shed many of those dumb concepts, but one concept needs to remain: the $15,000 home buyer tax credit.  This significant provision, which was developed in the Senate version, expands the current $7,500 tax credit and no longer requires that it only be used by first time home buyers – and it doesn’t have to be repaid to Uncle Sam (as is the current tax credit).

This, coupled with low interest rates, would be just the stimulus that the housing industry needs to overcome the fear the media has spread throughout the industry.   This is as close to a bailout as Main Street is ever going to get.

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