Hawaii’s mortgage rates fall to 4-year low
Hawaii home buyers are seeing the lowest mortgage rates since 2004 when rates fell to a 40-year historical low.
Current mortgage rates have dropped to 5.25 percent -- the same as four years ago -- and is expected to remain favorable through 2008, said Rusty Rasmussen, vice president of Castle & Cooke Mortgage, who was part of a panel of experts yesterday at the 2008 Hawaii Real Estate Forecast meeting, with more than 500 attendees.
"We should see very good mortgage rates through 2008 because of the weakness in the national economy and continued cuts by the Fed," he said. "We may not see these rates again."
Harvey Shapiro, research economist for the Honolulu Board of Realtors, predicts that the Federal Reserve will substantially lower bank rates this month by at least a half percent, which should result in even lower mortgage rates.
However, it is still difficult to forecast whether the lower rates will continue to keep the market buoyant, he said.
"It's really hard to tell what is going to happen in the housing market," Shapiro said. "Interest rates are very important but it's only one factor."
While Hawaii's economy is slowing, a positive factor is the weakening U.S. dollar -- now substantially lower than other world currency -- which could lead to additional investment in the islands, he said, adding that Honolulu is no longer the highest-priced city in the nation, making it more attractive for outside investment.
Despite lower interest rates this year, Shapiro expects further declining sales in the residential market, though prices likely will remain stable, he said.
"The decrease in interest rates should lessen the decline," he said. "But demand has fallen off and we're going to be affected just like the mainland in terms of a weaker market."