May 3 (Bloomberg) -- Mortgage rates for 30-year fixed U.S. loans fell to a record low, reducing borrowing costs as concerns about the U.S. economic recovery and euro-region unemployment drove investors to the safety of government bonds.
The average rate for a 30-year mortgage fell to 3.84 percent in the week ended today from 3.88 percent, Freddie Mac said in a statement. It was the lowest in the McLean, Virginia-based mortgage-finance company’s records dating to 1971. The average 15-year rate dropped to 3.07 percent from 3.12 percent.
Yields for 10-year U.S. Treasuries, a benchmark for mortgages, approached the lowest level in almost three months yesterday after reports showed that euro-area unemployment rose to a 15-year high and manufacturing contracted for a ninth-month. American companies added 119,000 workers in April, the smallest gain in seven months, according to figures from ADP Employer Services.
“Lower interest rates do provide support for housing,” said Keith Gumbinger, vice president of HSH.com, a mortgage-information website based in Pompton Plains, New Jersey. “Unfortunately the economy appears to be sputtering again and that doesn’t foster the kind of confidence needed for consumers to want to take on what is one of life’s biggest financial obligations.”
U.S. homeownership fell to the lowest level in 15 years in the first quarter as borrowers lost homes to foreclosure and tighter credit kept buyers off the market. The rate dropped to 65.4 percent from 66 percent in the fourth quarter, the Census Bureau reported on April 30.
The Mortgage Bankers Association’s home-loan purchase index rose 2.9 percent in the week ended April 27, while its refinance gauge dropped 0.7 percent, the Washington-based group reported yesterday.
The housing market appears to be bottoming as demand picks up. Contracts to buy previously owned homes climbed 4.1 percent in March from the previous month to the highest level since April 2010, the National Association of Realtors said last week. New homes sold at an annual pace of 328,000 in March, up 7.5 percent from a year earlier, the Commerce Department reported April 24.
To contact the reporter on this story: Prashant Gopal in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Kara Wetzel at email@example.com