Nov. 1 (Bloomberg) -- U.S. mortgage rates fell, decreasing borrowing costs as the real estate recovery gains momentum.
The average rate for a 30-year fixed mortgage dropped to 3.39 percent in the week ended today from 3.41 percent, Freddie Mac said in a statement. The average 15-year rate declined to 2.7 percent from 2.72 percent, according to the McLean, Virginia-based mortgage-finance company.
Home values are increasing as traditional homebuyers compete with investors for a shrinking supply of listings. The S&P/Case-Shiller index of prices in 20 U.S. cities rose 2 percent in August from a year earlier, the biggest gain since July 2010, the group said this week.
Higher prices, along with mortgage rates close to record lows, are “boosting home sales by nudging fence-sitters, who up to now have been waiting for home prices to bottom out before jumping into the ring,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, wrote in a note to clients after the Case-Shiller data were released.
The 30-year average reached an all-time low of 3.36 percent last month, while the 15-year hit a record of 2.66 percent, according to Freddie Mac.
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