NEWEST BUILDER PROMOTION - ULTRA-LOW RATE, 30-YEAR FIXED RATE LOANS!
3.99% FIXED RATE OFFERED BY TOLL BROTHERS, PA BUILDER WITH SEVERAL CHICAGO AREA DEVELOPMENTS UNDER CONSTRUCTION!
Free Wide-Screen HDTV's! Paid College Tuition for the kids! Vacations to the Tropics! Top-Level Kitchen and Bath Upgrades!
These have been common tactics used by builders of new homes to lure buyers in today's sluggish Chicago Real Estate Market - usually, with a lackluster level of success.
Now, as summarized in Dawn Wotapka's article in today's Wall Street Journal, one major builder - Toll Brothers, whose local development 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.
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.
DEAN MOSS & DEAN'S TEAM CHICAGO
