U.S. mortgage rates fell as concern that Cyprus’s debt crisis might worsen drove investors to the safety of the government bonds that guide home loans.
The average rate for a 30-year fixed mortgage was 3.54 percent in the week ended today, down from a six-month high of 3.63 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate dropped to 2.72 percent from 2.79 percent.
Low borrowing costs are fueling demand for housing as buyer competition for a shrinking supply of listings bolsters prices. The 10-year Treasury yield reached a two-week low on March 19 before Cyprus’ parliament rejected an unprecedented levy on bank deposits that was part of European plans to force savers to shoulder part of a bailout of the country.
“For American mortgage borrowers, bad news is good news,” said Keith Gumbinger, vice president of HSH.com, a Pompton Plains, New Jersey-based mortgage-information website. “Every time it looks as though things are calming down, something else crops up to throw another set of jitters into the marketplace.”
The housing market’s recovery from a five-year slump is one of the U.S. economy’s bright spots. House prices rose 6.5 percent in the 12 months through January, the Washington-based Federal Housing Finance Agency said today.
Rising prices helped about 200,000 homeowners regain positive equity in their properties in the fourth quarter, according to CoreLogic Inc. At the end of last year, 10.4 million homes, or 21.5 percent of all residential properties with a mortgage, were underwater, with owners owing more than the property was worth. That was down from 10.6 million homes, or 22 percent, at the end of the third quarter, the Irvine, California-based data firm said March 19.