U.S. 30-Year Fixed Mortgage Rates Fall to Record 4.57%, Freddie Mac Says

 

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July 8 (Bloomberg) -- Matthew Blesso, founder and president of Blesso Properties, discusses the outlook for commercial real estate and the prospects for the New York residential property market. Blesso speaks with Deirdre Bolton on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

Mortgage rates for 30-year U.S. loans fell to the lowest on record for the third straight week, reducing borrowing costs for homebuyers as unemployment and foreclosures weigh on demand.

The average rate declined to 4.57 percent in the week ended today, the lowest since Freddie Mac began compiling the data in 1971, the mortgage-finance company said in a statement. It was 4.58 last week. Rates for 15-year loans rose to 4.07 percent from 4.04 percent, McLean, Virginia-based Freddie Mac said.

Borrowing costs have tumbled in the past three months amid investor demand for bonds including mortgage-backed securities. Lower rates have failed to lift housing sales, which sank after the expiration of a tax credit for home buyers. An index of applications to buy homes fell to the second-lowest level since 1997 last week, according to the Mortgage Bankers Association.

“The problem right now is there are some other headwinds going on,” George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio, said in a telephone interview. “The labor reports have been on the soft side the last couple of months.”

Private employers added fewer workers to payrolls in June than forecast, according to a Labor Department report on July 2. Including government, payrolls fell for the first time this year because of a drop in federal census workers. The U.S. unemployment rate last month was 9.5 percent.

Foreclosure Supply

The supply of foreclosed homes for sale is also slowing a recovery. Foreclosures may reach 1.9 million this year after a record 2 million in 2009, Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said last month.

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 June 23. Existing-home sales decreased 2.2 percent from April to a 5.66 million annual rate, National Association of Realtors data showed June 22.

It would take 8.3 months to sell all available 3.89 million existing homes, the Realtors association said.

Applications to purchase a home declined 2 percent in the week ended July 2, the Mortgage Bankers Association said yesterday. Lower rates helped push an index measuring refinancings up 9.2 percent.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.