Reuters reports that President Bush on Friday rejected the idea of any change in the U.S. tax code that would eliminate the deduction for mortgage interest:

During a question-and-answer session in Florida, Bush was urged by a home owner to make sure that housing remains affordable. "Maybe you’re hinting at whether or not the mortgage deduction would be part of a plan," Bush responded. "I don’t think you have to worry about the mortgage deduction not being a part of the income-tax law."

The Final Report of the President’s Advisory Panel on Federal Tax Reform recommends replacing the current deduction, available only to itemizers, of interest on up to $1.1 million of mortgage debt with a "Home Credit" equal to 15% of mortgage interest paid, available to all taxpayers, limited to the average regional price of housing ($227,000 – $412,000).