Hula Mae loan rate dips to new low

Advertiser Staff

The state government's newest batch of home loans to low-income families will be offered at the lowest interest rate in the 23-year history of the program.

About $50 million in 30-year Hula Mae loans will be made available at a 5.76 percent annual interest rate, the state Housing and Community Development Corp. announced yesterday.

The low rate comes as housing mortgage rates have begun to rise after a dramatic plunge in the months following Sept. 11.

In Honolulu, the average 30-year annual percentage rate last week was 6.93 percent — compared with 6.18 percent in early November and 6.83 percent in early March 2001, according to a Honolulu Advertiser analysis of Honolulu Board of Realtors data.

The November rates were some of the lowest seen in years in Hawai'i, which mirrored the national trend.

Home sales and prices have risen in the past year, and new home construction has also increased.

Those rates include "points" — extra charges paid at loan closure. Hula Mae recipients must pay 1 percent of the loan as a point.

Real estate industry observers said the low rates have helped spur a borrowing and home-buying boom in Hawai'i.

"This new Hula Mae financing will help increase the sale of newly developed homes," said Craig Watase, president of the Building Industry Association of Hawai'i. "This comes at a perfect time to help spur construction."

The loans will be offered at Bank of Hawaii, First Hawaiian Bank, American Savings Bank and most other Hawai'i banking companies.

The bond-financed Hula Mae program has produced $1.7 billion in home loans for more than 9,700 families since it started in 1979. The loans are available for families of three with income less than $75,000, or larger families with combined incomes under $87,000. They can be used to buy homes with sales prices below $270,000.