4.71% interest on 30-year loans is lowest since data started being tracked in ’71
Rates for 30-year mortgage loans hit an all-time record low this week, giving many Clark County Realtors new hope that a fragile recovery under way in the local housing market will continue.
“Everybody was buzzing about it,” Linda McClellan, president-elect of the Clark County Association of Realtors, said Thursday. “The extension of the first-time home buyer tax credit, low loan rates and low home prices are continuing to bring buyers out. But we don’t have the supply we had, which makes me wonder if (home) prices may inch up (in some neighborhoods) before too long.”
According to an Associated Press report, rates for a 30-year loan dropped to 4.71 percent this week, pushed down by an aggressive government campaign to reduce borrowing costs. The rate published by Freddie Mac is the lowest since the mortgage finance company began tracking the data in 1971. The previous record was set in April, then matched last week.
“We’re hopeful that the rates will make a difference,” said Pam Baker, vice president of the home loan group at Columbia Credit Union in Vancouver. Baker sees the Clark County housing market still slow but stabilizing, with some neighborhoods showing slight price increases.
“We seeing more activity despite December not being especially good for people looking for homes,” Baker said. “We’re hoping that it extends into the first quarter next year.”
Sales of new and pre-owned homes in the county were the strongest in October of the past three years, with 590 sales that had a median price of $203,000. Sales were up from 431 in October 2008 when the median price was $235,000.
Low loan rates are helping, but it’s still hard to get a loan, said some real estate professionals.
“The reality is that this week’s record low rate is not that much different than the past few months,” said Terry Wollam, an agent with ReMax in Vancouver, who has been selling houses here for the past 12 years. “Issues remain about qualifying for a loan and about (home) appraisals. But the bottom line is that the inventory of homes for sale is dropping.”
Wollam is pleasantly surprised to see the low rates, which he expects to hang around into the first quarter.
“The Fed stopped buying Treasuries in October, but the fact that rates have held and are lower increases my confidence in the Fed’s future ability to fight inflation without raising rates.”
Wollam said buyers seem to be aware of the low loan rates with activity picking up in his office.
“It’s hard to separate out how much is due to the first-time home buyer tax credit ($8,000) and how much is market dynamics,” he said. “Last year, this office was a ghost town; this year it’s like the busier summer months.”
Tighter requirements
Nationally, lenders have tightened their standards dramatically, so the best rates are available to only those with solid credit and a 20 percent down payment, said the AP. But buyers who qualify have a range of housing to choose from, including many condominiums priced below $100,000, McClellan said.
“One of my buyers was looking for a house priced between $150,000 and $175,000 in the Salmon Creek, Minnehaha or Walnut Grove areas,” she said. “We came up with 174 housing units for sale that met the criteria.”
This week, the average rate on a 15-year fixed-rate mortgage fell to a record low of 4.27 percent, from 4.29 percent last week, according to Freddie Mac. Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, up from 4.18 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.25 percent from 4.35 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.
The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans, said the AP report. The fee averaged 0.6 points for 15-year, five-year and one-year loans.
Buyers and homeowners who want to refinance are picking up their phones. Mortgage applications rose 2 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday, driven by a more than 4 percent increase in purchase applications and a nearly 2 percent increase in applications to refinance existing loans.
