Mortgage Rates Fall to Record Lows With 30-Year at 3.53%

U.S. mortgage rates fell, with 30- year loans reaching a record low for a fifth straight week, amid an uneven recovery in the housing market.

The average rate for a 30-year fixed mortgage dropped to 3.53 percent in the week ended today, the lowest in Freddie Mac records dating to 1971, from 3.56 percent. The average 15-year rate declined to 2.83 percent, also a new low, from 2.86 percent, the McLean, Virginia-based mortgage-finance company said today in a statement.

An unemployment rate stuck above 8 percent and stricter lending standards are limiting a rebound in property purchases, even with borrowing costs at record lows. Sales of previously owned homes declined 5.4 percent in June to an eight-month low, data from the National Association of Realtors showed today.

“There is underlying improvement under way in housing demand in the U.S.,” Paul Diggle, property economist for Capital Economics Ltd., said today in a telephone interview from London. “We always knew it would proceed with fits and starts, and the report today is consistent with that.”

New U.S. home construction rose 6.9 percent in June to the highest level in almost four years, the Commerce Department reported yesterday. An index of builder confidence from the National Association of Home Builders/Wells Fargo climbed in July by the most since September 2002.

Low borrowing costs are pushing homeowners to reduce their monthly payments. An index of applications for refinancing surged 21.6 percent in the week ended July 13, the most since January, the Washington-based Mortgage Bankers Association said yesterday. The group’s purchase gauge was little changed.

To contact the reporter on this story: Noah Rayman in New York at nrayman@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net