U.S. mortgage rates fell, decreasing borrowing costs after more Americans applied for home loans.
The average rate for a 30-year fixed mortgage was 3.32 percent in the week ended today, down from 3.34 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate slipped to 2.66 percent from 2.67 percent.
Home prices are rising as low interest rates bolster demand for a shrinking supply of properties. A measure of home-loan applications increased 6.2 percent in the week ended Dec. 7, the Washington-based Mortgage Bankers Association said yesterday. The group’s purchase gauge gained 0.7 percent to the highest level in a year, and its refinancing index jumped 8 percent.
“Stronger mortgage demand suggests that would-be buyers are growing in confidence,” Paul Diggle, property economist for Capital Economics Ltd. in London, wrote in a note to clients on Dec. 11. “Nevertheless, mortgage lending will continue to be held back by tight credit.”
Home prices climbed 6.3 percent in October from a year earlier, the biggest jump since June 2006 and the eighth consecutive increase on a year-over-year basis, according to CoreLogic Inc., an Irvine, California-based data firm.
The average 30-year mortgage rate dropped to a record 3.31 percent last month, according to Freddie Mac.