Another salvo has been fired in the price war among home builders — Lennar Corp. is offering a fixed mortgage rate of 3.625%.
"That's going to generate some interest," said Joe Snider, a senior credit officer at Moody's Investors Service Inc. "Other home builders who have lowered it to that neighborhood have reported a surge in interest" among buyers.
Lennar, the nation's largest builder by revenue, said on its Web site Monday that it is offering the 30-year rate "on select homes." The minimum credit score is 700, and closings must occur by April 30. The loan amount cannot exceed $417,000. The Miami company, which is scheduled to report quarterly earnings today, would not discuss the offer.
Since the downturn began, builders have offered everything from free vacations to paid closing costs to move inventory. They then cut prices and offered layaway plans for down payments. As the market continued to crumble, they tried cutting loan rates.
Toll Brothers Inc. shocked the industry this year by offering a 3.99% rate for 30 years, instead of a low rate for a few years that resets at a higher fixed number. Other builders followed suit.
"I am reluctant to say we're not going to see anything lower" than 3.625%, Snider said. Six months ago he "never expected rates to fall this low."