U.S. mortgage rates declined for a third week, making homebuying more affordable as demand for properties slumps.
The average rate for a 30-year fixed loan fell to 4.87 percent in the week ended today from 4.95 percent a week ago, according to Freddie Mac. The average 15-year rate was 4.15 percent, down from 4.22 percent, the McLean, Virginia-based mortgage-finance company said in a statement.
“Mortgage rates saw an overall improvement this week,” Frank Nothaft, vice president and chief economist of Freddie Mac, said in the statement. “However, housing demand still remains weak.”
The housing market struggled at the start of the year with unemployment at 9 percent and foreclosed properties flooding the market. The number of Americans signing contracts to buy previously owned homes dropped 2.8 percent in January, the National Association of Realtors said Feb. 28. December contracts were revised to a 3.2 percent decline after the group initially reported a gain.
Mortgage applications in the U.S. fell 6.5 percent last week, according to a Mortgage Bankers Association’s index, which covers about half of all U.S. retail residential-mortgage originations. The Washington-based group’s purchase index decreased 6.1 percent in the week ended Feb. 25, and its refinancing gauge declined 6.5 percent.
The rate for a 30-year fixed loan reached an eight-month high of 5.05 percent in February. The decline since then has pushed the monthly payment for a $300,000 mortgage to about $1,587 from $1,620.