U.S. mortgage rates fell to a four-month low after a weaker-than-expected jobs report drove investors to the safety of the government bonds that guide borrowing costs.
The average rate for a 30-year fixed mortgage dropped to 4.13 percent the week ended today from 4.28 percent, Freddie Mac said in a statement. The average 15-year rate declined to 3.24 percent, from 3.33 percent.
Mortgage rates have retreated from a two-year high in August after the Federal Reserve signaled it needed more signs of lasting improvement in the economy before scaling back a stimulus plan aimed at lowering borrowing costs. Yields for 10-year Treasuries, a benchmark for home loans, dropped to a three-month low this week following a report that showed U.S. payrolls increased in September by less than economists projected.
“The weak economy is helping to keep mortgage rates from rising,” said Keith Gumbinger, vice president of HSH.com, a Riverdale, New Jersey-based mortgage-data firm.
Purchases of U.S. existing homes dropped 1.9 percent in September from an almost four-year high as rising prices and mortgage rates discouraged would-be buyers, the National Association of Realtors reported this week. Home affordability was at an almost five-year low, with the median price up 11.7 percent from a year earlier.
Buyer competition for a limited supply of homes has been fueling price gains. U.S. house prices rose 0.3 percent in August from July, the smallest increase in 11 months, as more homeowners listed their properties for sale, according to Federal Housing Finance Agency data released yesterday.