March 17 (Bloomberg) -- U.S. mortgage rates fell to the lowest in almost two months, tracking a drop in Treasury yields as Japan’s deepening nuclear crisis spurred demand for relatively safe investments.
The average rate for 30-year fixed loans declined to 4.76 percent in the week ended today from 4.88 percent a week ago, according to Freddie Mac. The average 15-year rate was 3.97 percent, down from 4.15 percent in each of the past two weeks, the McLean, Virginia-based mortgage-finance company said in a statement.
Yields on 10-year U.S. Treasury notes, which are benchmarks for some consumer loans, fell this week to the lowest level since December and stocks sank, reflecting investors’ concern about the risk of radiation leaks at the Fukushima Dai-Ichi nuclear plant 135 miles north of Tokyo.
“There’s been a little flight to -- I don’t want to say safety -- quality,” said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer-loan data in Pompton Plains, New Jersey. “As long as trouble remains in the forefront, interest rates are likely to be lower than they otherwise would be.”
The drop in rates probably will lead to an increase in refinancing, Gumbinger said.
Mortgage applications in the U.S. fell 0.7 percent in the week ended March 11, according to the Mortgage Bankers Association’s index. The Washington-based group’s measure of purchase applications declined 4 percent and its refinancing gauge climbed 0.9 percent.
Housing starts plunged to a 22-month low in February, and permits for construction fell to a record low, the Commerce Department said yesterday. U.S. homebuilders are competing with foreclosures and falling prices for existing homes.
Rates for home loans began climbing from a record low of 4.17 percent in the week ended Nov. 11 and reached a 10-month high of 5.05 percent in February. The rate decline since then has pushed the monthly payment for a $300,000 mortgage to about $1,567 from $1,620.
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