Congress last week approved legislation that will extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers. The bill also provides relief to cash-strapped home builders by providing broader tax benefits for businesses with net operating losses (NOLs).

The legislation, which was signed into law by President Obama on Nov. 6, will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed on by June 30. It has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence. Existing home owners can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight.

In more good news, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised from $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return to $125,000 for individuals and $225,000 for married couples

Freddie Mac reports that mortgage rates continued to drift higher last week, with average interest of 5.03 percent on a 30-year fixed loan — up from a flat 5 percent the previous week. The government-sponsored enterprise reports that 30-year fixed rates have been hovering around the 5 percent mark mainly due to government intervention. The result has been a refinancing boom, with refis accounting for seven of every 10 mortgages this year. For 15-year fixed loans, this past week’s rate averaged 4.46 percent compared to 4.43 percent a week earlier.

Bankrate.com’s national survey of large lenders put the benchmark 30-year, fixed-rate mortgage at 5.35 percent, up slightly for the third week in a row.

[SOURCES: Freddie Mac; Information, Inc.; Bankrate.com]