WALL STREET JOURNAL:  Mon., March 30, 2009

Lennar Offers 3.625% Mortgages.
Could Rates Go Lower?

 

Building giant Lennar just started offering a 3.625% 30-year fixed-rate mortgages, putting even the recent headline-grabbing sub-5% rate to shame. It is, the company says, its lowest rate ever.

The deal isn’t available on every home. It’s only for new purchases. And requirements are pretty tight. The minimum credit score is 700, and closings must occur by April 30. The loan amount can’t exceed $417,000, and at least 10% has to be put down.

Such rock-bottom rates are the latest strategy from builders, who have offered everything from tropical vacations to gourmet kitchens to lure buyers to the closing table during the worst market in years. This move focuses instead on the bottom line.

“What they want is the lowest monthly payment that’s humanly possible,” says Fox-Pitt Kelton analyst Robert Stevenson.

Here’s the rub: The unemployed or workers worried about losing their jobs are unlikely to buy, regardless of the rate.  But those who are interested might want to sit tight. As builders attempt to one-up each other with specials, it’s just a matter of time before someone beats 3.625%.