U.S. mortgage rates fell for the third straight week as investors filled a void left by the end of a Federal Reserve program to purchase bonds backed by home loans.
Rates for 30-year fixed loans dropped to 4.93 percent in the week ended today from 5 percent last week, Freddie Mac said in a statement. The average 15-year rate was 4.3 percent, the McLean, Virginia-based mortgage finance company said.
Low home loan rates may help support a housing recovery as a government tax credit for homebuyers expires. The central bank has pledged to keep rates low for an extended period as the economy recovers. Home prices rose in 91 U.S. metropolitan areas in the first quarter compared with a year earlier, the National Association of Realtors said May 11.
Falling rates will help people “save a couple bucks on mortgage payments” when they refinance a home loan, said Keith Gumbinger, vice president at HSH Associates, a mortgage-data company in Pompton Plains, New Jersey. Declining borrowing costs also provide a boost to buyers who missed the government’s April 30 deadline for a tax credit of as much as $8,000, he said.
This week’s rates, the lowest since Feb. 18, might have been influenced by investors flocking to less risky securities such as Treasuries as the Greek debt crisis unfolded and the Dow Jones Industrial Average took an unexpected plunge, Gumbinger said.
Home sales in the U.S. gained in March as buyers took advantage of a tax credit of as much as $8,000 that required recipients to sign contracts by April 30. New home sales surged 27 percent in March, the biggest gain since recordkeeping began in 1963, according to the Commerce Department. An index of signed purchase agreements for previously owned homes rose 5.3 percent in March, the Realtors group said May 4.
The Mortgage Bankers Association’s index of mortgage applications rose 3.9 percent in the week ended May 7. The portion of refinancings climbed 15 percent. Applications to purchase fell 9.5 percent.