Looking back for a moment, it was late November 2008 when mortgage rates first dropped below 5.0% for a conventional 30 year loan. Rates stayed low through the spring and early summer before heading back up into the mid 5% range in mid to late summer. At that time I thought "the party was over." However, mortgage rates soon dipped back below 5.0% towards the end of 2009 and into 2010. Rates stayed aggressively low for almost the entire 2010 calendar year except for what ended up being a brief period of time in March. Flash forward to the start of 2011 and we still had great rates consistently in the high 4.0% range. As news of the economic recovery started to increase and the stock market began performing well rates finally crept back into the 5s and reached as high as 5.375% for a stretch of time. Again, I thought the "party was over."
Today's mortgage rates are still below 5.0%! Well qualified borrowers are seeing rates as low as 4.75% fixed for 30 years. There are even rates below 4% for people refinancing into a term of 10 years.
Housing prices are still well off their highs of a few years ago.
Who said lightning doesn't strike twice? From where I sit it appears this is the third lightning bolt to hit the mortgage market. We have a third consecutive spring with some of the lowest mortgage rates on record. Mortgage payments for new buyers will be more affordable because of these low rates.
In some cases a buyer may be able to find a mortgage payment similar to what he or she already pays for rent.
The two most popular loan programs for new buyers are probably FHA and USDA Rural Development's Guaranteed Loan Program. FHA requires a down payment of only 3.5% of the purchase price. RD allows a qualified buyer access to 100% financing. Both of these programs are secure government backed programs. When a first time homebuyer in Maine combines these programs with a Maine State Housing Loan they can achieve an even better interest rate and gain access to the "Gift of Green" grant money program.
I was speaking with a builder earlier today and he agreed; it is another perfect storm, a combination of low interest rates, affordable housing prices, and quality available financing options.