Senate Banking Committee Chair Wants FTHB Credit Extended

Senate Banking Committee chairman Chris Dodd, D-Conn., went on the record Tuesday calling for a seven-month extension of the $8,000 first-time homebuyer tax credit, which is set to expire in five weeks. Chairing a hearing on the state of the housing market, Sen. Dodd said home prices are stabilizing but "we still need to use every tool at our disposal to try and fix this problem." The White House has yet to reveal its position on the extension. The Mortgage Bankers Association and other trade groups, predictably, support the extension. MBA chief economist Jay Brinkmann told the committee that one great unknown facing the market is what will happen to interest rates when the Federal Reserve stops purchasing mortgage-backed securities from Fannie Mae and Freddie Mac. He noted that there is growing concern over the issue saying, "While the most benign estimates are for increases in the range of 20 to 30 basis points, some estimates of the potential increase in rates are several times those amounts."