To Buy or Not to Buy a Home?

With home loan interest rates at an all time low of 3.9 percent, lenders say it's the perfect to buy. But home sales are influenced not only by consumer confidence, but loan eligibility.

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By Kirsten Swann

Story Created: Oct 7, 2011 at 7:22 PM AKDT

Story Updated: Oct 10, 2011 at 7:48 AM AKDT

 

At 3.9 percent, interest rates are at historic lows and it might seem like home sales would go through the roof in response.

 

But sales across the state remain steady and lenders said there’s more to buying a home than just interest rates.

 

"You could have historically low interest rates, which we have now, but if you don't have consumer confidence to the extent that they're secure in their job, they're not going to go out and purchase a home,” said Paul Kapansky, director of mortgage operations for Alaska Housing Finance Center.

 

Consumer confidence is just one of the reasons why the Anchorage real estate market remains steady, rather than skyrocketing in response to decreased interest rates.

 

But there’s another reason, too: a lending climate that has changed drastically over the past several years.

 

"Five years ago, if you had a pulse, you could get a loan,” Kapansky said. “That's not an exaggeration."

 

In today's market roughly 40 percent fewer buyers are qualifying for loans this year than last year.

 

Some lenders state that a 2010 federal rebate program caused an artificial spike in home sales, another reason for this year’s flat numbers.

 

“I think the lower interest rates are offsetting the tax credit incentive, the federal tax credit incentive that homebuyers had last year,” Kapansky said.

 

No matter the rates, realtors said there’s one thing to keep in mind.

"Make absolutely sure that you do qualify for the loan program they are telling you about,” said Art Clark of Real Estate Brokers of Alaska. “Don't take it for granted just because they say it."

It could be the biggest investment you ever make.

 

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Jerry said on Friday, Oct 7 at 10:16 PM

Home sales would be better if the price of homes were not so darn high ! As far I am concern the prices are just way out of hand and most of the medium income people cant afford a home in Anchorage ! I see some homes that I wouldnt pay $50'000 for , but they be asking 200'000 , Crazy !

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not said on Sunday, Oct 9 at 6:08 PM

property taxes plus insurance is what is driving the cost over the edge for a lot of potential buyers in Anchorage.

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