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Mortgage Rates in the U.S. Drop to Near-Record Lows

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Dec. 13 (Bloomberg) -- 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.

To contact the reporter on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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