U.S. mortgage rates fell to a record, extending a two-month tumble in borrowing costs for homebuyers as property demand slumps.
The average rate for a 30-year fixed mortgage dropped to 4.36 percent in the week ended today from 4.42 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 3.86 percent.
Mortgage rates have set or met a record for 10 straight weeks as concern of a faltering economic recovery spurred demand for bonds including those backed by home loans. Low borrowing costs have yet to spur home sales, which are being depressed by unemployment and the end of a federal homebuyer tax credit.
“In terms of affordability, the mortgage market is going to be good for the housing market,” Paul Dales, U.S. economist for Capital Economics in Toronto, said before the report. “But there are other factors, namely just the poor economic conditions. All is very well if mortgage payments are low, but if you don’t have a job, it doesn’t make a difference.”
Sales of new homes fell 12 percent in July from the previous month to the lowest annual pace since data dating to 1963, the Commerce Department said yesterday. Existing-home sales plunged 27 percent last month to the slowest annual pace since comparable records began in 1999, according to the National Association of Realtors.
U.S. unemployment is near a 26-year high at 9.5 percent. Applications for unemployment benefits dropped by 31,000 -- the first decline in a month -- to 473,000 in the week ended Aug. 21, Labor Department figures showed today.
Low interest rates have fueled refinancing activity as Americans seek to lower borrowing costs. Refinancing applications jumped 5.7 percent to the highest level since May 2009 in the week ended Aug. 20, according to the Washington- based Mortgage Bankers Association.