U.S. 30-Year Mortgage Rates Slide to Record Low
U.S. mortgage rates fell to a record low, reducing borrowing costs for homebuyers as sales slump after the expiration of a government tax credit.
Rates for 30-year fixed loans declined to 4.69 percent in the week ended today from 4.75 percent, mortgage-finance company Freddie Mac said in a statement today. The previous record was 4.71 percent, set in the week ended Dec. 3. The average 15-year rate was 4.13 percent, McLean, Virginia-based Freddie Mac said.
“The overall level of real estate activity is low, but low mortgage rates will help in generating some growth,” George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio, said in a telephone interview. “It’s going to be off very low levels.”
Borrowing costs have tumbled in the past two months as concern that a debt crisis in Europe may spread boosted demand for the safety of bonds including mortgage-backed securities. The lower rates have failed to lift housing demand, which has tumbled since a tax credit for first-time and certain other buyers expired at the end of April.
The average price of $5.2 trillion of bonds guaranteed by government-supported Fannie Mae and Freddie Mac or federal agency Ginnie Mae climbed to 106.3 cents on the dollar yesterday, according to Bank of America Merrill Lynch’s Mortgage Master Index. That’s up from 104.2 cents on March 31, when the Federal Reserve ended its program purchasing $1.25 trillion of the debt.
High unemployment and the supply of foreclosed homes for sale are slowing the housing recovery. Foreclosures may reach 1.9 million this year after a record 2 million in 2009, according to Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.
U.S. new home sales sank 33 percent to an annual pace of 300,000, the lowest level on record, in May, the Commerce Department said yesterday. Existing-home sales decreased 2.2 percent from April to a 5.66 million annual rate, National Association of Realtors data showed June 22.
The Mortgage Bankers Association’s index of mortgage applications fell 5.9 percent in the week ended June 18. The portion of refinancings slumped 7.3 percent. Applications to purchase a home declined 1.2 percent.