The lowest mortgage interest rates in 50 years — 4 plus percent for a 30-year fixed loan — is not spurring real estate sales, according to Sonny Nguyen, a Century 21 M&M and Associates mortgage consultant.
“People think there’s going to be another drop in interest,” he said. “There’s a hesitation to jump in with both feet.”
According to Freddie Mac’s Primary Mortgage Market Survey, a 30-year fixed-rate mortgage averaged 4.57 percent for the week ending July 1. The 15-year fixed-rate averaged 4.07 percent.
Mary Norton, a Century 21 M&M mortgage consultant working in Madera and Clovis, said other factors contributing to lessen the impact of low-interest rates include:
- Mortgage rates have been low for the past 18 months and most homeowners have already refinanced mortgages.
- Many homeowners have little or no equity in their property and thus do not qualify to refinance.
- Many people lack the credit or income to refinance or buy a home.
Norton said some people falsely believe it now takes perfect credit to secure a loan.
“The perspective is it is difficult to get a loan,” she said. “I’ve been in this business 22 years and I don’t see it more difficult.”
In addition, many potential homebuyers don’t believe home prices have not hit bottom yet. Nguyen said they might be right. He said a client purchased a home two years ago in Tracy for $250,000 and the house recently was appraised for $220,000.
“He thought he bought at the bottom,” said Nguyen. “That kind of tells you there are people in the same situation.”
Norton and Nguyen said their mortgage business has kept pace with last year’s numbers and ahead of national figures.
According to the National Association of Realtors, existing home sales dipped 2.2 percent nationally in May over April. For the same period, California existing home sales were up 14.1 percent.
“My business is about the same as last year, but the numbers last year were off from the previous year,” said Norton.
“I’m still seeing a demand for purchase and refinance mortgages,” said Nguyen.
Both Nguyen and Norton believe the record-low interest rates will continue throughout this 2010.
“I definitely see it stable for the rest of the year,” said Nguyen. “It should stay 5 percent or lower because the economy has a ways to go.”
Norton agrees, but does not want mortgage rates to drop any further. “I hope they don’t go down anymore,” she said. “That would mean our economy is not getting better.”
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