30-Year, Fixed-Rate Mortgages Dropped to Under 5%

Tracking Mortgage Interest Rates With 33 years of experience selling real estate, Joannie Selman-Prince thought she had seen it all. That is until earlier this month when interest rates for 30-year, fixed-rate mortgages dropped to record lows.

“This is a very unusual market,” said Selman-Prince, a Lodi-based Realtor with Century 21 M&M and Associates. “I don’t think we’ll ever see it again in my lifetime.”

She was commenting on the dynamics of the current residential real estate market, low prices and low-interest rates. “Usually when you have low prices, interest rates are high,” she said. “And when you have high prices, interest rates are low.”

According to Bankrate.com, in a recent national survey of large lenders, the average 30-year, fixed-rated mortgage dropped to 4.96 percent. The rate was the lowest recorded in the nearly 25-year history of Bankrate’s survey.

The record low rates don’t have people running to buy a home, in fact, Selman-Prince said her recent home sales have taken a dip.

“The rates have been low since the first of the year,” she said. “We’ve seen a drop because of the tax credit expiring.”

The conclusion of the federal tax credit of up to $8,000, which created a rush to meet the April 30 deadline for a binding contract, has helped the working-class buyer, said Joseph “Gus” Saar, a Century 21 M&M Realtor in Tracy.

“With the tax credit gone away, it allowed FHA and VA buyers to get their loans accepted,” he said. “I had a couple of FHA and VA loans accepted on REO sales and that’s rare. Those primarily go to all-cash buyers.”

Sonny Nguyen, a Century 21 mortgage consultant, said FHA loans require a 3.5 percent down payment and conventional loans mandate 10 percent down. “Right now, both are under 5 percent interest,” he said.

Nguyen said with the recession and real estate crash, many mortgage brokerages and agents did not survive. “The fall-out rewards the people that are still here,” he said.

Today’s mortgage shoppers, having witnessed sub-prime loans and questionable lending practices, are much more wary, Nguyen said.

“Buyers are not just shopping for rates,” he said. “They’re looking for someone they can trust.”

Fellow Century 21 mortgage consultant John Anaya confirms the sub-prime era has made today’s buyer much more knowledgeable about the process and the importance of a good credit score. “Most of my clients have already been pre-qualified by real estate agents,” he said.

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