From the Press of Atlantic City:
Mortgage rates this month have fallen to their lowest levels in recorded history, but local industry observers still do not expect a flurry of home-buying to follow.
Many applicants who meet today’s tougher standards for mortgage eligibility would need to pay 20 percent up front for a house. Would-be buyers are waiting for prices to bottom out, or putting off growing their families, or simply waiting for more job stability, said Michael Busler, associate professor of business studies at the Richard Stockton College of New Jersey.
“We’re in a housing crisis,” Busler said. “We have an oversupply of houses because we built so much and there are so many foreclosures hitting the market. They’re hoping (for the federal government) to stimulate demand somewhat. Normally, recoveries from severe recessions are much more robust than the one we’re having.”
At First Mutual in Pleasantville, Thursday’s average 30-year rate was even lower, about 4.125 percent, branch manager Jim Malamut said.
However, historically, low rates haven’t helped the struggling housing market, which recorded its worst summer in more than a decade. A shore market of mostly second homes struggled, too.
“The rates are wonderful. They couldn’t be any better, but it’s become more difficult to get a mortgage for a buyer,” said Linda C. Naame, a Century 21 broker and owner in Egg Harbor City.
Naame said she is noticing that clients need a credit score above 640 to get any kind of mortgage. That can be difficult for some first-time buyers who have had trouble getting or keeping jobs in a poor economy, thus costing them chances to build credit.
“It used to be whenever you were in the 600s, you were OK,” Naame said.
Malamut said applicants qualified about 65 percent to 70 percent of the time in 2005; the figure is “probably 40 percent” today.
“Everything is looked at very closely, where before it wasn’t looked at closely,” Malamut said. “The whole industry’s in overhaul.”
The larger down-payment standard “is an obstacle, but it’s probably a good obstacle,” Malamut said. “It makes people put more of an investment into their purchase. A couple years ago, people were buying houses because they were told they had to buy houses. Now, we’re back to reality.”