Mortgage rates reach historic lows

October 6, 2011 4:13:54 PM PDT
Mortgage rates have been falling for months, but on Thursday they reached historic lows. For the first time, a 30-year fixed loan comes with an interest rate under 4 percent.

In some cases, mortgage payments are lower than rent. While the news may not do much for the housing market around the nation, in Houston things are different.

Sellers who have been trying to get rid of their homes may be getting some help. For the first time ever, a 30-year fixed mortgage is below 4 percent.

"I have lent for 29 years and these are record lows from anything we have seen," said Stacy London with Houston Capital Mortgage.

She says low rates are eye-catching, but sales may not go up much.

"People are still concerned about their job -- will they be employed or be unemployed; are they worried about the property value or are they worried they can not sell so that they can move up and buy the next home," London said.

Home sales in August were up 30 percent in the Houston area from the previous year, but realtors point out last August sales were very bad because the homebuyer tax credit had ended.

Still there is good news for the Houston housing market. People moving to the area for jobs are driving home sales.

"We are seeing business professionals, mid-level executives being transferred in and taking relocation packages to Houston and we are also seeing on the purchase side, move up buyers -- someone who had an entry level home is saying now is a great time to buy," said mortgage broker Steve Kyles with The Kyles Team.

He says refinancing is also driving business. As for those record-low mortgage rates, it means buyers can afford more expensive homes without paying much more per month.

"In Houston, you can buy up to $50,000 more house. For example at five (percent), or low fives, buying a $200,000 house, you can now buy a $250,000 house for the lower interest rate and have the same payment," Kyles said.

There are still barriers for buying; lending requirements are tougher, but for those who qualify, buying could be cheaper than renting in some cases.

If you are considering refinancing, mortgage brokers say it makes sense if you lower your rate by one full percent and plan to stay in your home for at least a few years longer.

The lower rates are surprising a lot of experts. Last year, when the rates got below 5 percent everyone thought this was the bottom and now they are a full percentage point lower.

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