July 25 (Bloomberg) -- U.S. 30-year mortgage rates fell to the lowest in three weeks, reducing borrowing costs for homebuyers as the residential-property market strengthens.
The average rate for a 30-year fixed mortgage dropped to 4.31 percent in the week ended today from 4.37 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate slipped to 3.39 percent from 3.41 percent.
Federal Reserve Chairman Ben S. Bernanke is expected to begin trimming monthly bond-buying in September, according to half of the economists in a July 18-22 survey by Bloomberg News. Mortgage rates for 30-year loans have decreased after jumping to the highest level in two years earlier this month on speculation the Fed will begin to pare its purchases. Higher rates have pushed up borrowing costs for homebuyers who are competing for a tighter inventory of properties.
“Markets have become more accustomed to the idea that the Fed is going to remove the extraordinary supports that have been in place sometime soon,” Keith Gumbinger, vice president of HSH.com, a Riverdale, New Jersey-based mortgage website, said in a telephone interview.
The 30-year rate is below the average of about 5.3 percent for the past 10 years, according to data compiled by Bloomberg.
Sales of new U.S. homes rose more than forecast in June to a five-year high, the Commerce Department said yesterday. The increase is a sign that higher rates may do little to hurt the housing recovery, according to Paul Diggle, property economist at Capital Economics Ltd. in London.
“The strong rise in new-home sales in June means that the housing market has come through its first major test of higher mortgage rates unscathed,” Diggle said in a research note after the figures were announced.
U.S. house prices rose 7.3 percent in the year through May, the Federal Housing Finance Agency said on July 23.
At the same time, higher loan costs may be continuing to slow refinancing. The Mortgage Bankers Association’s index of refinancing applications dropped 0.7 percent last week to the lowest level since July 2011. The purchases gauge fell 2.1 percent, the Washington-based trade group said yesterday.
Sales of previously owned homes fell unexpectedly in June, the National Association of Realtors said on July 22.
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