U.S. Mortgage Rates Rise From Half-Century Low, Freddie Mac Says
Mortgage rates in the U.S. rose for the first time in four weeks, pushing borrowing costs up from the lowest in more than half a century as a faltering economy holds back home purchases.
The average rate for a 30-year loan increased to 4.22 percent in the week ended today from 4.15 percent, according to Freddie Mac. The 15-year rate rose to 3.44 percent from 3.36 percent a week ago, the McLean, Virginia-based mortgage-finance company said in a statement today.
Loan applications for home purchases fell last week to the lowest in more than 14 years even as mortgage rates tumbled. Buyers are remaining on the sidelines as the unemployment rate sticks above 9 percent. Volatility in stock markets this month, spurred by concerns that the global economic recovery is weakening, have also hurt demand, according to David W. Berson, chief economist for PMI Group Inc.
“Low mortgage rates are helpful,” Berson said in a telephone interview. “But the volatility in the financial markets is having a significant impact on the confidence of potential home buyers.”
The Mortgage Bankers Association’s index of purchase applications dropped 5.7 percent in the week ended Aug. 19 to the lowest level since December 1996, the Washington-based trade group said yesterday. The refinancing gauge fell 1.7 percent while the share of applicants seeking to reduce their monthly payments climbed to 79.8 percent, the largest in nine months.
Record Lows
Last week’s 30-year rate was the lowest in Freddie Mac records going back to 1971. Data from the Bureau of Economic Research measuring Federal Housing Administration loans indicate that rate was the lowest since the 1950s, said Chad Wandler, a spokesman for Freddie Mac.
Home prices in the U.S. fell 5.9 percent in the second quarter from a year earlier, the biggest decline since 2009, the Federal Housing Finance Agency said yesterday.
New-home purchases decreased 0.7 percent to an annual rate of 298,000 in July, the lowest level in five months, the Commerce Department said this week. Sales of previously owned homes dropped 3.5 percent in July to a 4.67 million annual rate, the weakest since November, the National Association of Realtors said Aug. 18.
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
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