Hope you're warmer where you are, than it is here in Chicago. Temperatures appear to be moderating, however - for now! We're just below the freezing mark!
The latest promotion by a major home builder to stir sales in a continued-weak housing market comes from PA based Toll Brothers Builders. The national builder, with several large developments in the Chicago Suburbs, is offering very low Fixed-Rate Mortgage Loans to qualified buyers for its newly-constructed homes.
As summarized in Dawn Wotapka's article in today's Wall Street Journal, Toll Brothers, whose local projects stretch from the Chicago Suburbs of Bloomingdale to Barringtion and Elgin to Morton Grove to Gurnee - is beginning to offer ultra-low, 3.99% 30-Year Fixed Rate Loans - with no up-front points - to those borrowing as much as $417,000 to purchase one of their newly-constructed homes!
The current national average 30-Year Fixed Mortgage Rate is just below 5.00% - the lowest since U.S. Investor and Guarantor Freddie Mac started keeping records 38 years ago.
Will other Chicago-area home builders follow? Unknown at this point, but stiff competition is likely to follow in a feverish attempt to grab home buyer business in a yet-to-rebound Chicago Area Real Estate Market.
For years, to incentivize buyers, and make it easier for them to purchase a newly-constructed home, some builders have offered rate buy-downs, which reduce mortgage interest rates for a pre-determined initial period. The rate then increases to a market-competitive level for the balance of the loan. Centex Corporation, the third largest home builder in the U.S., is offering 3.5% interest rates for the first two years of the loan on homes under contract by February 2nd. After two years, the rate adjusts and locks to 4.5%.
Lennar Builders tried a similar tact over the last few months.
The reduced-rate loans typically require an FHA Minimum 3.5% down payment.
Lower interest rates, of course, result in lower monthly house payments. It is hoped the promise of greater affordability could lure many potential homebuyers off the sidelines and into their new home. However, resale inventories remain high across the Chicago area - exceeding 12 months of supply in some Chicago Neighborhoods and Suburbs.
Also, many neighborhoods are loaded with short-sale and foreclosed, bank-owned properties, selling at discount prices - giving newer, more expensive homes a run for their money.
And rising unemployment, and the prospect of not having a job, will likely scare away many from making a move.
Please view our post today via BlogChicagoHomes.com.
DEAN MOSS & DEAN'S TEAM CHICAGO
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