Mortgage rates for 30-year U.S. loans declined for the first time in five weeks, reducing borrowing costs from a 10-month high.
The average rate for 30-year fixed loans fell to 5 percent for the week ended today from 5.05 percent, according to Freddie Mac. The average 15-year rate was 4.27 percent, down from 4.29 percent a week earlier, the McLean, Virginia-based mortgage-finance company said in a statement.
The decline follows a surge in rates that sent demand for U.S. mortgages to a two-year low. A lasting housing recovery has been held back by mounting foreclosures and 21 straight months of unemployment of at least 9 percent.
“The housing market is struggling to regain traction despite still historically low rates,” Frank Nothaft, vice president and chief economist for Freddie Mac, said in the statement.
The Mortgage Bankers Association’s index of loan applications decreased 9.5 percent in the week ended Feb. 11 to the lowest point since November 2008, dragged down by a plunge in refinancing.
The Washington-based group’s refinancing measure dropped 11 percent, and its gauge of purchases fell 5.9 percent. The share of mortgage applicants seeking to refinance slid to 64 percent, the lowest level since May, from 66.6 percent the previous week.
Refinancing will drop substantially through the year, said Matt Howlett, an analyst at Macquarie Group Ltd. in New York.
“We see very little sensitivity in terms of refinancing to minimum rate changes,” Howlett said in an interview. Refinancing would pick up only if “there were some other government stimulus that hasn’t already been constructed. And that just seems unlikely,” he said.
Housing starts rose 15 percent in January to a 596,000 annual rate, the U.S. Commerce Department said yesterday. The gain was buoyed by a 78 percent increase in multifamily homes, where new building has been below expectations for several months, according to the National Association of Home Builders, a Washington-based trade association.
Construction on single-family homes fell 1 percent in January to a 413,000 annual pace, the lowest level since May 2009, the Commerce Department said.