Realtor.org - With the end of the Federal Reserve's mortgage purchase program March 31st and the tax credit set to expire on April 30th, what kind of market will Realtors be facing in the second half of 2010?

The National Association of Realtors' (NAR) Chief Economist,LawrenceYun, has answers to Realtor's most pertinent questions.

Are interest rates going to rise? Yun maintains the position, "mortgage rates need not rise notably if private investors step in. I think this will be case.

"Now with the financial market stabilized and banks making profits, there appear to be plenty of private investors who are willing to purchase government-backed mortgages.

"So if the private money flows into mortgages, then the mortgage rates could remain pretty much where they have been recently."

Other macroeconomic forces may affect rates, states Yun, such as the U.S.budget deficit pushing "government borrowing rates higher" eventually affecting mortgage rates. Or, the economic recovery induces "the Fed to step off the gas pedal and raise interest rates."

What happens after the tax credit goes away?

According to Yun, "The more interesting question is what happens in the several months after the tax credit deadline, say from October and onwards."

If home values have stabilized and show modest increases "then the many people who have been on the sideline waiting for the bottom will no longer have any further reasons to wait."  

In Yun's estimation, "there appear to be more than a usual number of renters with the necessary finances to buy a home, but have chosen not to because they did not want to purchase a depreciating asset. This suggests a bottleneck in pent-up demand."

The bottom line for Yun is "job creation and the removal of the 'fear factor' regarding home prices will provide support when the tax credit goes away."

Meanwhile, figures released Thursday by NAR indicate a 6.8 percent rise in existing-home sales in March, seasonally adjusted to an annual rate of 5.35 million units, compared to last month's 5.01 million units.

The March 2010 figure represents a 16.1 percent increase above the 4.61 million-unit level in March 2009.

"Buyers responding to the home buyer tax credit and favorable affordability conditions," according to NAR are "marking the beginning of an expected spring surge."

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