U.S. mortgage rates fell for the first time in three weeks as investors speculated that the Federal Reserve will hold off on tapering bond purchases that are bolstering the economy.
The average rate for a 30-year fixed mortgage dropped to 4.22 percent from an eight-week high of 4.35 percent, Freddie Mac said in a statement today. The average 15-year rate slipped to 3.27 percent from 3.35 percent.
Mortgage rates have retreated from a two-year high in August as bond investors bet that the Fed will press on with asset purchases aimed at keeping down borrowing costs. Janet Yellen, nominated to be the central bank’s next chairman, affirmed her support for the stimulus efforts at her Nov. 14 confirmation hearing before the Senate Banking Committee.
“Because the communication strategy of the Fed has been somewhat garbled, it’s only natural for investors in the bond market to look at what the Fed is saying for clues,” Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, said in an interview.
Policy makers said they might reduce their $85 billion in monthly bond purchases “in coming months” as the economy improves, according to minutes of the Federal Open Market Committee’s Oct. 29-30 meeting, released yesterday.
The jump in borrowing costs from near-record lows in May has slowed the housing recovery by restraining buyer demand. Purchases of previously owned U.S. homes fell in October to the lowest level since June, the National Association of Realtors said yesterday. The median price increased 12.8 percent from a year earlier, reflecting a limited supply.
An index of purchase-loan applications rose 5.8 percent last week to the highest level since September, the Mortgage Bankers Association reported yesterday. The gauge is down about 13 percent from early May. The group’s refinancing measure fell to a two-month low.