Mortgage rates for 30-year U.S. loans fell to a record low for a fifth straight week as concern about Europe’s worsening financial crisis drove investors to the safety of the government bonds that guide borrowing costs.
The average rate for a 30-year mortgage dropped to 3.75 percent in the week ended today from 3.78 percent, Freddie Mac (FMCC) said in a statement. It was the lowest in the McLean, Virginia- based mortgage-finance company’s records dating to 1971. The average 15-year rate declined to 2.97 percent, also a record, from 3.04 percent.
Yields for 10-year U.S. Treasuries, a benchmark for home loans, hit an all-time low yesterday as Spain struggled to rescue its troubled banks, adding to signs that the European debt crisis is spreading to the region’s larger economies. Low borrowing costs are helping to provide a foundation for the stabilizing U.S. real estate market after a six-year slide in home prices.
“It is good news for the housing market, but the problem for the housing sector isn’t that borrowing costs are high, it’s that banks are unwilling to lend,” said Millan Mulraine, a senior U.S. strategist at TD Securities Inc. in New York.
The number of Americans signing contracts to buy previously owned houses fell in April by the most in a year, the National Association of Realtors said yesterday. Pending home resales dropped 5.5 percent from March. They rose 15 percent from a year earlier.
Home prices in 20 U.S. cities fell in the 12 months through March at the slowest pace in more than a year. The S&P/Case- Shiller index of property values dropped 2.6 percent from a year earlier following a 3.5 percent decline in February, the group reported May 29.
To contact the reporter on this story: Prashant Gopal in New York at email@example.com
To contact the editor responsible for this story: Kara Wetzel at firstname.lastname@example.org