Mortgage Rates on 30-Year U.S. Home Loans Set Record Low for Eighth Week
U.S. mortgage rates set a record low for the eighth straight week after the Federal Reserve said it would buy more government debt to support economic recovery.
The average rate of a 30-year fixed-rate mortgage dropped to 4.44 percent in the week ended today from 4.49 percent, Freddie Mac said in a statement. That was the lowest since the McLean, Virginia-based mortgage finance company began compiling the data in 1971. The average 15-year rate was 3.92 percent.
Officials directed the New York Fed’s trading desk to reinvest what economists estimate will be $15 billion to $20 billion a month in maturing agency and mortgage-backed securities back into U.S. Treasuries. The purchases will help keep Treasury yields and mortgage costs low.
“The Fed buying treasuries signifies an economy that needs support, which is driving rates lower,” said Mahesh Swaminathan, a mortgage-bond analyst at Credit Suisse Group AG. “As long as this view persists, the rates can remain low.”
About $16 billion of the central bank’s portfolio of mortgage-backed debt sold by government-supported Fannie Mae and Freddie Mac or government-charted Federal Home Loan Bank system will mature over the next six months, according to FTN financial.
The decline in mortgage rates reduces borrowing costs for home buyers. The Mortgage Bankers Association reported yesterday that its index of mortgage applications gained 0.6 percent last week, primarily on home refinancings.
“You do have a nice pickup in the segment of borrowers who can refinance,” Swaminathan said. ”But many can’t take advantage because of other constraints.”
About 325,229 U.S. properties got a notice of default, auction or bank repossession last month, RealtyTrac Inc. said today in a report.