Mortgage Rates for 30-Year Fixed U.S. Loans Drop to Record, Freddie Says
Aug. 19 (Bloomberg) -- Steven Abrahams, an analyst at Deutsche Bank AG, talks about the U.S. housing market, mortgage lending and the importance of improved U.S. jobs data for raising home values. He talks with Carol Massar and Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)
U.S. mortgage rates set a record low for the ninth straight week, making it cheaper to borrow and more attractive to refinance homes.
The average rate for a 30-year fixed mortgage dropped to 4.42 percent in the week ended today from 4.44 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 3.9 percent.
Mortgage applications jumped 13 percent in the week ended Aug. 13, fueled more by homeowners refinancing property than new buyers looking for loans, according to an index from the Washington-based Mortgage Bankers Association. Record low interest rates have yet to spur home sales, which are being weighed down by unemployment and the end of a federally sponsored homebuyer tax credit.
“The weak sales are reflective of the general economic weakness,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “A lot of it still gets back to the job market. Unless you have a full recovery in the job market, you won’t have a full recovery in housing.”
Applications for unemployment benefits in the U.S. unexpectedly increased last week to the highest level since November. Initial jobless claims rose by 12,000 to 500,000 in the week ended Aug. 14, Labor Department figures showed today.
The number of contracts to purchase existing homes dropped 2.6 percent in June after plummeting 30 percent in May, according to the National Association of Realtors.
Homebuilders’ sentiment fell in August to its lowest level since March 2009, according to the National Association of Home Builders/Wells Fargo confidence index. Housing starts in July rose less than forecast; and building permits, which forecast future activity, declined to the lowest level since May of last year, the Commerce Department said this week.
To contact the reporter on this story: Prashant Gopal in New York at Pgopal2@bloomberg.net
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