Few buying homes despite low rates

PHOTOGRAPHER: Kelly de la Rocha

Last week, the national average rate for a 30-year fixed-rate mortgage dropped below 4 percent for the first time ever, to 3.94 percent, but that historic rate drop is not causing much of a stir in the local housing market.

Currently, area rates are slightly higher than that rock-bottom rate. A 30-year, fixed-rate mortgage hovers between 4.25 percent and 4.5 percent. It’s still a great time to buy or refinance, say area bankers and real estate agents, but insecurity about the economy is making consumers hesitant.

Virginia Mackey, real estate broker and owner of Virginia M. Mackey Real Estate LLC in Gloversville, said lower mortgage rates haven’t brought in business, which is very slow because of the economy.

“I’ve been in the profession for 45 years and I’ve been through all kinds of problems. I have been through interest rates at 19 percent and we still sold houses because the economy was not as bad,” she said. “People are just scared to death. They don’t know what’s going to be happening with their future.”

Agent Doreen Ross, owner of Doreen Ross and Associates in Schenectady, reports home sales have been steady, but not stellar. Local residents are more concerned with disturbing unemployment numbers and the lack of job growth than they are with interest rate figures, she said.

“In 40 years of experience, I find that the buyers’ confidence is one of the lowest I’ve ever seen. They’re scared. They’re absolutely scared.” The house hunters who are out there, she noted, aren’t making much of a fuss over the low interest rates.

“A lot of them have already been pre-qualified. They got a good interest rate at the time, and I don’t think that they are that concerned over the new interest rate drop,” she reported.

However, buying a house is the best deal around right now if you can afford it, Ross said. “Rent in Schenectady right now is probably over $700 a month. You can buy a home [in Schenectady] and your payment literally is not much more. You can deduct all the taxes, you can deduct all the interest, and you are ahead of the game.”

But statistics show that despite enticing interest rates, homebuyers are hesitant. As of August, local residential sales were down 13 percent from August 2010, according to figures provided by the Capital Region Multiple Listing Service Inc.

James Ader, president of the Greater Capital Association of Realtors, says there is still reason for optimism.

“We started [2011] with some very slow months, but it has been improving throughout the year,” he said.

The Greater Capital Association of Realtors represents Realtors throughout the Capital Region. Members have seen an increase in house hunters since mortgage rates have dropped, Ader reported. He attributed that increase not only to the record-low mortgage rates but also to employment statistics.

“Generally, employment in the area is pretty good and there’s hope for it to be even better,” he said, citing the influx of Saratoga County-based jobs generated by GlobalFoundries and the nanotechnology industry. “I think the next couple of years are going to be pretty exciting around here.”

John Wyatt, senior lending officer for First National Bank of Scotia, also sees reason for optimism. Since news of the historically low mortgage rates broke, the bank has seen a new wave of customers interested in refinancing their mortgages. Current mortgage rates, however, aren’t enticing enough to lure hordes of ambivalent house hunters to sign on the dotted line, he noted. “The rates were attractive to begin with [before the latest drop],” he said. “Another 1⁄4 percent [drop] is not going to make people get up and say, ‘Now is the time to buy a house.’ ”

Raymond O’Conor, president of Saratoga National Bank and Trust Company, said mortgage sales and refinancing volume have been fairly steady. Since interest rates have been relatively low for quite some time, he said there has been no recent rush of applicants. “We’re not seeing the kind of volume for refinancing that we saw in 2008 and 2009 when there was a precipitous drop in the interest rates because of the onset of the recession,” he said.

Rates right now are great, he said, but he cautioned potential buyers and refinancers not to be dazzled by the current national mortgage rates. “That figure that’s been put out, of the 30-year mortgage rate dropping below 4 percent, is a national figure, and if you were to rate-shop many of the lenders in this area, you’re not going to find a 30-year fixed-rate under 4 percent without paying origination fees or points,” he said. A point is a fee paid by the borrower to lower the mortgage interest rate.

Sometimes, local, competitive mortgage rates aren’t what they seem, he cautioned.

“Those rock-bottom rates don’t apply to all loans,” he said. “They only apply generally to those loans that can be sold to Fannie Mae or Freddie Mac. So, for example, somebody with less than [a] 20 percent down [payment] is probably not going to get that rate. Somebody who has a jumbo mortgage — a mortgage in an amount over $417,000 — is not going to get that rate. Someone who has impaired credit is not going to get that rate.”

Fannie Mae is the Federal National Mortgage Association. Freddie Mac is the Federal Home Loan Mortgage Corporation.