The recent fall in rates is not surprising as the Fed recently finished wrapping up its 12 month $300 billion treasury buyback program and continues its efforts in purchasing $1.25 trillion worth of mortgage-backed-securities. Despite rates lingering just above all time lows in the recent months, the national volume for mortgage loan applications is at its lowest point in almost twelve years.

Volume is expected to pick back up now that Congress has passed legislation to extend the home buyer tax credit. The extension now includes a tax credit of up to $6,500 for existing owners buying a new house as a primary residence. The annual income eligibility limits have also been raised from $75,000 to $125,000 for singles and from $150,000 to $225,000 for married couples. The tax credit has been very well received by homeowners and has been cited as a big factor in the recent increase in national home sales and prices in the U.S.