Rates for U.S. 30-year mortgages climbed from the lowest level on record after Federal Reserve officials pledged to keep their benchmark interest rate near zero through at least late 2014 to help bolster the economy.
The average rate for a 30-year fixed loan rose to 3.98 percent in the week ended today from 3.88 percent, the lowest in records dating to 1971, Freddie Mac said in a statement. The average 15-year rate increased to 3.24 percent from 3.17 percent, according to the McLean, Virginia-based mortgage- finance company.
The 30-year rate has been below 4 percent for eight straight weeks. The Fed yesterday extended its previous plan to keep rates low at least until the middle of 2013 as more than two years of economic growth have failed to push unemployment below 8.5 percent. Low borrowing costs are helping support the housing market, which has been hurt by the high jobless rate and foreclosures that depress values and erode buyer confidence.
“Mortgage rates are very, very low and housing is very affordable,” Celia Chen, housing economist at Moody’s Analytics in West Chester, Pennsylvania, said in a telephone interview before the data were issued. “The distressed sales are still a weight on the market.”
Sales (ETSLTOTL) of previously owned homes rose 5 percent in December from the previous month to the highest level since January 2011, the National Association of Realtors said last week. Distressed properties -- comprising foreclosures and short sales, where the price is less than the mortgage balance -- accounted for almost a third of all purchases.
The number of Americans signing contracts to buy existing houses fell 3.5 percent last month after a 7.3 percent gain in November, figures from the Realtors showed yesterday.
Home-loan applications decreased in the period ended Jan. 20 after jumping 23 percent in the prior week, according to the Mortgage Bankers Association. The measure of purchase loans dropped 5.4 percent, while the refinancing index fell 5.2 percent, the Washington-based group said yesterday.
To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net
To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net
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