Mortgage rates for 30-year U.S. loans tumbled, matching the lowest level on record and keeping borrowing costs down as the real estate market improves.
The average rate for a 30-year fixed mortgage fell to 3.49 percent in the week ended today from 3.55 percent, Freddie Mac said in a statement. It matched a record reached in July. The average 15-year rate slid to 2.77 percent from 2.85 percent, a new low, according to the McLean, Virginia-based company.
Low borrowing costs, spurred in part by the Federal Reserve’s purchase of mortgage securities, have aided a housing-market recovery after the worst downturn since the 1930s. Sales of existing homes climbed to a two-year high in August, the National Association of Realtors reported yesterday. Single-family housing starts rose to the fastest annual rate since April 2010, the Commerce Department said.
“It’s a very slow recovery but things are looking up,” said Patrick Newport, U.S. economist at IHS Global Insight in Lexington, Massachusetts. “Unless we tip into a recession, it looks like the housing market is going to continue to improve going forward for the next several years.”
Mortgage costs probably will remain low for some time. On Sept. 13, the Federal Reserve said it will expand holdings of long-term securities with purchases of $40 billion of mortgage debt a month and keep the benchmark interest rate close to zero at least through mid-2015.