The Housing Recovery and Targeted Government Stimulus

For anyone who argues the relevance of government stimulus on housing recovery, I submit the following.
One third of all home buyers in the past several months have taken advantage of the $8000 home buyer tax credit.

In addition to the tax credit, the housing market has arguably been juiced by government induced low mortgage rates. By buying up Fannie Mae and Freddie Mac mortgage-backed securities, the government has pushed the 30-year fixed to near record lows, recently at 5.02 percent and now around 5.08 percent (national average). That has pushed the refinance share of activity to 61 percent of all mortgage application volume, according to today's Mortgage Bankers Association weekly mortgage survey.

So it begs the question, what happens when the gravy train runs out?

The tax credit is set to expire Nov. 30th and the government is only set to keep buying Fannie and Freddie securities through the end of this year. Some experts say with all the government stimulus and deficit spending interest rates are sure to eventually rise. Only time will tell. One thing is for sure; It's a buyers market and the government is playing Santa Claus. So if there is anything on your wish list this year it may be time to act.