Realtors optimistic that record low 4.49 percent mortgages will encourage more homebuyers!

By KEVIN POST Business Editor | Posted: Thursday, August 5, 2010 |pressofatlanticcity.com

Mortgage interest rates fell this week to a new low for the past half-century, raising hopes that homebuyers will be attracted to once-in-a-lifetime financial terms.

"The rates are fantastic. I've never seen them this low in my lifetime and never even heard of them ever being this low," said Richard Shaffer III, broker/owner of Resorts Ltd. Inc. in Egg Harbor Township and president of the Atlantic City & County Board of Realtors. "I have a buyer who is applying for a 3.99 percent mortgage from TD Bank. That's unheard of."

Freddie Mac, now a government-controlled buyer of mortgages, said Thursday the average rate for the week was 4.49 percent for 30-year, fixed-rate mortgages, the lowest since it began tracking rates in 1971 and the lowest on record since the 1950s.

Rates have been setting record lows for two months, reaching 4.78 percent in May and dropping almost weekly since.

"I hope it gives a boost to the real estate market, and it should," said Shaffer, 46, of Mays Landing.

William Wagner, broker/owner of Keller Williams Realty Atlantic Shore in Northfield, likewise finds mortgage rates stunning.

"I've been doing this for 33 years, and this is best market for buyers. Nothing else even comes close," Wagner said, saying the rates come at a time when prices have fallen and many distressed properties are on the market. "It can't get any better than this."

Fernmoor Homes has seen more serious buyers at its developments in Atlantic County, said Carol Smith Gephart, sales manager for the Jackson Township-based builder.

"Not only are interest rates low, but housing prices are low. I've been in the business 30 years and haven't seen home prices like this in more than a decade," she said.

Low mortgage rates are increasing the purchasing power of first-time, move-up buyers and retirement buyers, she said, at Fernmoor's Crystal Lakes and Crystal Meadows developments in Egg Harbor Township and Woods Landing in Mays Landing.

Lenders are more careful, she said, requiring higher credit scores and more documentation, but buyers are adjusting.

"We've seen a lot of buyers come to terms with what they actually can afford, and they're happy to go out and find that," Smith Gephart said.

The residential market could use the help. The 330,000 new U.S. home sales in June was the second lowest number on record, after May's 276,000, the Commerce Department said.

Sales of existing homes fell 5.1 percent in June to an annual rate of 5.37 million, the National Association of Realtors said.

Low rates alone may not be enough for many would-be homebuyers.

"Employment and job stability are the things that I can think of that might be holding people back," Shaffer said.

Atlantic County's jobless rate in June was 12 percent, not adjusted for seasonal changes, state Department of Labor and Workforce Development figures show.

"The biggest challenge in Atlantic County is the unemployment situation. It's really bad," said Wagner, 59, of Galloway Township.

He said even those still working often are earning less, crimping their home-purchasing ability.

"Casino dealers are a median income group and they're making $27,000 to $30,000 a year, when they used to make $40,000 to $45,000," Wagner said, citing a drop in toke rates, or shared tips.

The latest drop in mortgage rates isn't setting off a wave of refinancing either, since rates have been very low for months.

The Mortgage Bankers Association said loan applications increased 1.3 percent this week, with the refinance index up 1.3 percent and the purchase index up 1.5 percent.

In mid-July, the MBA's refinance index increased 8.6 percent to the highest level in more than a year.