U.S. Mortgage Rates Fall to Five-Month Low, Freddie Mac Says

Mortgage rates in the U.S. decreased for a fourth week, sending borrowing costs to the lowest level since December.

The average rate for a 30-year loan dropped to 4.63 percent in the week ended today from 4.71 percent, according to Freddie Mac. That is the lowest since the week ended Dec. 9. The 15-year rate slipped to 3.82 percent from 3.89 percent a week ago, the McLean, Virginia-based mortgage-finance company said.

Falling rates helped drive demand for mortgages last week and encouraged homeowners to reduce their monthly payments. The Mortgage Bankers Association’s measure of refinancing rose 9 percent in the week ended May 6, the biggest increase in two months. Purchase applications climbed 6.7 percent, the Washington-based group said yesterday.

“Housing is more affordable than it was in several decades,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “On the other hand, the number of people who can qualify for these great rates isn’t that large.”

The U.S. housing market is struggling to recover as unemployment hovers at 9 percent. Home prices dropped in 118 of 153 cities as foreclosures that sell at cut-rate prices devalued real estate, the National Association of Realtors said May 10.

The average rate for a 30-year fixed loan is below where it was last year at this time, when it was 4.93 percent, according to Freddie Mac. It fell to a record 4.17 percent in November.

To contact the reporter on this story: Prashant Gopal in New York at pgopal2@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net