Looking to jolt paralyzed buyers into action, builder Toll Brothers (TOL) is offering a 3.99% fixed mortgage rate for 30 years, one of the lowest available.

The Horsham, Pa., company said the deal is for loans $417,000 or less and carries no points for the buyer.

"We think we're going to create some excitement in the marketplace," said Don Salmon, president and chief executive of TBI Mortgage Co., Toll's mortgage subsidiary.

The deal started this week, so it's too early to gauge customer reaction. But the industry is intrigued.

"Wow! What do I have to say other than 'Wow?' That's pretty spectacular," said Richard E. Peek Jr., vice president of the Florida Association of Mortgage Brokers. "It's an extremely strong offer on a new home purchase at this point."

While Toll's average prices top $600,000, the company said plenty of buyers can tap the special, which doesn't have a set end date, because the average customer puts 30% down. Last year, 70% of the loans TBI originated were below $417,000.

And, executives add, many of its first-time buyer communities carry price tags under $500,000.

Toll didn't reveal its funding source, but said the lenders support the rock-bottom rate, which requires a credit score of 720 or higher and a down payment of 20% without private mortgage insurance.

Rates have plunged as the housing and financial crisis deepens. For the week ended Jan. 15, the 30-year fixed-rate mortgage slipped to an average 4.96% with an average .7 point, according to Freddie Mac (FRE).

The rate, which has fallen for 11 consecutive weeks and was 5.69% a year ago, is the lowest since Freddie Mac began its survey in 1971.

Several builders report the falling rates are spurring buying traffic, though it is unclear if that's generating any sales. In addition to falling prices and competition from mounting foreclosures, the elevated unemployment rate is hurting builders and scaring buyers.

"We think there's pent-up demand and buyers are on the sidelines, and they need some sort of catalyst to bring them into the market," said Frederick N. Cooper, Toll's senior vice president, finance and investor relations. "We're hoping this will be one such catalyst."

The Dow Jones US Home Construction Index, down nearly 30% in the last year, has fallen more than 9% so far this year. Toll has gained nearly 6% in the last year, but has fallen nearly 14.75% this year.

On Wednesday, it closed at $18.27, up 3.28%.

-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248; dawn.wotapka@dowjones.com

(Kelly Nolan contributed to this story.)

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.