U.S. mortgage rates for 30-year loans fell to a record low for a fourth straight week, reducing borrowing costs as a housing recovery takes hold.
The average rate for a 30-year fixed mortgage dropped to 3.78 percent in the week ended today from 3.79 percent, Freddie Mac said in a statement. It was the lowest in the McLean, Virginia-based mortgage-finance company’s data dating to 1971. The average 15-year rate held at 3.04 percent, also a record.
Buyers are returning to the real estate market as record-low mortgage rates, decreased prices and job gains combine to help lift demand. Purchases of new U.S. homes climbed 3.3 percent in April from the prior month, the Commerce Department said yesterday. Sales of previously owned houses had their first increase in three months, rising 3.4 percent from March, data from the National Association of Realtors show.
“Low mortgage rates are playing an increasingly important support for the housing market,” said Keith Gumbinger, vice president of HSH.com, a mortgage-information website based in Pompton Plains, New Jersey.
Low borrowing costs are encouraging homeowners to reduce their monthly payments. The Mortgage Bankers Association’s index of refinancing applications gained 5.6 percent in the week ended May 18, while the gauge of purchases declined 3 percent, the Washington-based group said yesterday.
U.S. home prices jumped 2.7 percent in March from a year earlier and 1.8 percent from the previous month, the Federal Housing Finance Agency said yesterday. The gain from February was the biggest in at least two decades and exceeded the estimates of all 18 economists surveyed by Bloomberg.
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