Mortgages offered at less than market rate

Central Virginia Bank is offering a below-market interest rate of 4.363 percent on 30-year fixed-rate mortgage loans up to $534,000.

But the rate is available only on the purchase of speculative homes financed by the Powhatan County-based bank, any pre-sold home that will be built on a lot financed by the bank and any bank-owned residential real estate.

"The real estate market has been under a lot of pressure, and we've seen an upward trend in mortgage rates in recent weeks," said Larry Lyons, president and chief executive of Central Virginia Bankshares Inc., the holding company for Central Virginia Bank, which operates seven branches in Powhatan, Cumberland, Chesterfield and Henrico counties.

Richmond-based First Market Bank, Union Bankshares Corp. in Bowling Green and First Capital Bank based in Henrico also are offering similar programs.

"We are providing these dollars to help our homebuilders sell their inventory of spec houses," Lyons said. "At the same time, we believe this special financing offers potential homebuyers an exceptional rate based on the current market, making it a win for the home purchasers, and a win for our builders as they move their inventory of houses from spec to sold."

On a $300,000 loan, CVB's 4.363 rate could save a homeowner as much as $200 a month and $73,000 for the life of the loan, based on the current average fixed-rate mortgage rate of 5.49 percent.

On a $300,000 loan, terms of repayment are 360 payments of $1,475.82 each, the bank said. On a $550,000 loan, the monthly payment would be $3,122.84. Payments include principal and interest only. Taxes and insurance will increase the monthly payment.

For loans of more than $534,000, CVB's interest rate is 5.602 percent.

The rates are available to qualified buyers who are financing a maximum of 80 percent of a home's cost or value, whichever is less, the bank said. The fee is 1 percent of the loan amount. The offer is good through Dec. 31.

First Market and Union Bankshares were the first in the area to offer a cut rate, providing an interest rate of 3.99 percent on mortgage loans up to $534,000 and 5 percent for jumbo loans.

The initial offer, which was good through May 31, did so well at First Market that it has been extended through July, said Jeanie Bode, senior vice president of construction for First Market.

To date, First Market has gained $7 million to $8 million worth of mortgage loans through the program, Bode said.

First Capital Bank initiated a similar program two weeks ago, offering an interest rate of 3.95 percent on mortgage loans up to $417,000 and 4.95 percent for higher loans.

"This helps builders, and it helps us get stale inventory off the books," said Jim Sedlar, senior vice president at First Capital Bank.

Contact Carol Hazard at (804) 775-8023 or .