Mortgage Rates for U.S. 30-Year Fixed Loans Decline to Record Low of 3.88%
Rates for U.S. 30-year mortgages dropped to the lowest level on record as the number of homeowners seeking to reduce their monthly payments surged.
The average rate for a 30-year fixed loan decreased to 3.88 percent in the week ended today, the lowest in records dating to 1971, from 3.89 percent, Freddie Mac said in a statement. The average 15-year rate increased to 3.17 percent from 3.16 percent, according to the McLean, Virginia-based mortgage- finance company.
The U.S. housing market, weighed down by an 8.5 percent unemployment rate, tight credit and foreclosures that drag down values, has shown signs of improvement. Refinancing (MBAVREFI) applications jumped 26 percent in the period ended Jan. 13 to the highest level since August, according to a Mortgage Bankers Association index. A measure of purchase applications rose 10 percent, the Washington-based group said yesterday.
“It’s certainly good news,” Paul Ashworth, chief U.S. economist at Capital Economics Ltd. in Toronto, said in a telephone interview yesterday. “If people manage to refinance at lower rates, reducing their monthly repayments, it will leave them more money each month to spend elsewhere. For mortgage purchases, if sustained, it is going to have some positive impact on sales.”
New-home sales jumped to a seven-month high in November, according to Commerce Department figures released Dec. 23. Sales of existing homes rose in November to a 10-month high, the National Association of Realtors said Dec. 21.
Confidence among U.S. homebuilders increased in January to the highest level in more than four years as sales and buyer traffic improved, according to a National Association of Home Builders/Wells Fargo sentiment gauge released yesterday.
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