2 Washington banks offer mortgages below 4 percent

SPOKANE, Wash. — Spokane-based Sterling Savings Bank and Walla Walla-based Banner Bank are offering mortgages at interest rates below 4 percent to stimulate sales and help builders move homes.

Bank officials said the low rates benefit buyers and builders, and demonstrate the banks are putting federal government bailout money to work in the Northwest.

Banner received $124 million from the federal Troubled Asset Relief Program, or TARP, while Sterling collected $303 million.

Banner Bank is offering fixed mortgages rates as low as 3.875 percent under its "Great Northwest Home Rush" program.

"We have been very pleased with what we've done so far," Banner Vice President Doug Bayne told The Spokesman-Review. "There's a time to buy, and that time is now."

Banner's program has helped move about 60 of 250 homes in the Portland area that Banner builders had not been able to sell, he said.

The bank expanded the program to Spokane, Idaho and the Puget Sound area after its success in Portland.

Most borrowers must have a 20 percent down payment, Bayne said.

Sterling is working with Golf Savings Bank, its mortgage lending subsidiary, to offer qualified borrowers either a 3.875 percent fixed mortgage rate or a 3 percent lender contribution, up to $20,000.

Golf Executive Vice President Donn Costa said the program helps reduce the inventory of unoccupied homes and firms up prices in markets where sales activity have been slow.

Sterling has set aside $25 million of its federal bailout money to the program, which has allowed it to do 10 times more loan volume than it would have without that money, Costa said.

The program covers homes built by a Sterling-financed contractor in parts of Washington, Oregon, Idaho, Montana and California. The deal must close by May 31, and most buyers will have to have a 10 percent down payment.

"This is real money," Costa said. "There's no tricks."

Costa said Sterling had $1.5 billion in contractor loans on its books since Dec. 31.

Spokane contractor Gordon Finch sold two homes priced over $500,000 in February with a boost from Banner.

He said the low interest rates helped level the playing field, since contractors have to compete bank efforts to get rid of foreclosed homes. Houses priced above $400,000 have been difficult to sell, even with incentives such as $10,000 of free landscaping.

"It makes a lot of sense to us to use the TARP money for this," Finch said.