BY AMY LAVALLEY, POST-TRIBUNE CORRESPONDENT
Mortgage rates continue their historic downward spiral, hitting new lows on a weekly basis.
This past week, the average rate for a 30-year fixed loan was 4.42 percent, and 3.9 percent for a 15-year fixed loan, according to mortgage buyer Freddie Mac’s website, www.freddiemac.com.
Whether that transfers to a surge in home sales in the region remains to be seen, according to those in the real estate field, as concerns about jobs and the economy at large may be holding back potential homebuyers.
The effect of the low interest rates is “obviously something hard to quantify,” said Pete Novak, chief executive officer of the Greater Northwest Indiana Association of Realtors, which serves Lake, Porter, LaPorte, Newton and Jasper counties.
Homebuyers typically don’t say why they may be purchasing a home, so how the interest rates play into that decision remains an unknown, he said.
“Clearly it’s having a positive impact on the market, but it’s hard to say because there are so many negative influences on the market,” Novak said.
It also can take time to see what such a change may mean for the market. The tax credit for first-time homebuyers offered earlier this year upped spring sales, but that offer has run its course for the most part, and it will take a couple of months to measure its effect on housing sales, Novak said.
The impact of the low interest rates “depends on the price range” of the homes, said Dawn Bernhardt, an associate broker with Coldwell Banker Residential Brokerage in Valparaiso, whose market concentration is in Porter County.
“In the upper price range, a lot of people have refinanced because of the lower rates,” she said, adding the high-end housing market is still moving slowly because of the economy. “As far as just moving up, most of (homebuyers) are being very cautious.”
The interest rates are good, she said, but not enough to overcome economic concerns.
Wes Morin, an associate broker with Century 21 Heritage Inc. based in Merrillville, said he saw “a lot of activity” earlier this year but things have since slowed down. He’s not sure if that’s because of the market’s ups and downs, or if it’s because of ongoing concerns about unemployment.
“I would think with rates as low as they are, there would be more buyers,” said Morin, whose business focuses on new home sales, mostly in Lake County. “We are seeing more buyers trying to take advantage of interest rates, but not as many as you would think — and I would be surprised if the rates go lower.”
One of the factors holding folks back, Morin said, may be that banks have tightened the reins on lending, so potential buyers who might have qualified a few years ago aren’t making the cut now.
Job uncertainty isn’t helping. “People are afraid to invest anything anyway,” Morin said.
Even a 2 percent interest rate on home loans won’t spur buyers who are worried about their jobs, Novak said, adding that clearly remains the biggest factor holding back home sales.
“For those who are willing, ready and able to buy, the interest rate is an enticement,” Novak said, adding for those concerned about job security, “they’re not going to be enticed by 5 percent, 4 percent, even 3 percent or 2 percent.”
The low interest rates “are a good thing,” Morin said, but aren’t what’s driving the market. Nor, he added, are housing prices, since Northwest Indiana hasn’t seen the dramatic highs and lows witnessed in other parts of the country.
Still, Novak said prices are stable or increasing in the region, and demand for homes seems to be up.
“Listings have quite frankly gone down because more homes are being purchased,” he said. “Indications are positive. There’s just that big underlying question mark of whether it’s tax credit driven.”
Tags: Freddie Mac, Mortgage Rates
