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Mortgage Rates Drop for Fifth Week as 15-Year Sets Record

May 2 (Bloomberg) -- Mortgage rates in the U.S. fell for a fifth week, with costs for a 15-year loan reaching a record low, adding support for housing demand as home prices climb.

The average rate for a 30-year fixed mortgage dropped to 3.35 percent in the week ended today from 3.40 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate decreased to 2.56 percent from 2.61 percent.

Low home-loan rates are fueling demand for home purchases, helping to boost prices as the inventory of properties for sale is close to the lowest in a decade. Residential real estate values rose in February by the most since May 2006, the S&P/Case-Shiller index of 20 U.S. cities showed this week.

“Low rates have certainly created demand in the marketplace, but there is not enough supply,” said Keith Gumbinger, vice president of HSH.com, a Riverdale, New Jersey-based mortgage-information website. “The low interest rate environment is likely to persist for some time yet.”

The Case-Shiller index jumped 9.3 percent from February 2012, more than economists forecast, after advancing 8.1 percent in the year ended in January. Compared with the prior month, prices in February rose the most since 2005.

The record rate for a 30-year mortgage is 3.31 percent, reached in November, according to Freddie Mac.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net

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

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