U.S. mortgage rates dropped, with 30-year loans reaching a record low for a sixth straight week, amid signs the housing recovery is slowing.
The average rate for a 30-year fixed mortgage fell to 3.49 percent in the week ended today, the lowest in Freddie Mac records dating to 1971, from 3.53 percent. The average 15-year rate declined to 2.8 percent, also a new low, from 2.83 percent, the McLean, Virginia-based mortgage-finance company said today in a statement.
Sluggish employment growth and tight lending standards are limiting a recovery in the housing market even as mortgage rates continue to fall, according to Celia Chen, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. Contracts to buy previously owned homes dropped 1.4 percent last month from a revised 5.4 percent gain in May that was less than initially reported, data from the National Association of Realtors showed today.
“It’s essential that the job market continues to add jobs,” Chen said. “If things don’t improve at least a little, yes, we do risk squashing this housing recovery.”
Private-sector employers added 84,000 jobs in June, the weakest in 10 months, and the unemployment rate stuck at 8.2 percent, U.S. Labor Department figures showed.
Purchases of new U.S. homes dropped in June from a two-year high, the Commerce Department reported yesterday. Sales of existing residences also declined, to an eight-month low, the National Association of Realtors reported.
Mortgage applications in the U.S. climbed last week as low borrowing costs spurred refinancing. An index of applications for refinancing increased 1.8 percent in the week ended July 20 from the previous week, the Washington-based Mortgage Bankers Association said yesterday. The group’s purchase gauge dropped 3.2 percent.