U.S. Mortgage Rates Fall With 30-Year at Lowest in 14 Monthsby
Average home-loan rate tumbles to 3.59% from 3.71% last week
Decline in borrowing costs comes at peak time for homebuying
U.S. mortgage rates fell to the lowest in more than a year, reducing borrowing costs during the peak season for homebuying.
The average rate for a 30-year fixed mortgage was 3.59 percent, down from from 3.71 percent last week and matching the level in early February 2015, Freddie Mac said in a statement Thursday. The average 15-year rate slipped to 2.88 percent from 2.98 percent, the McLean, Virginia-based mortgage-finance company said.
Mortgage rates tracked a sharp drop in yields last week for the benchmark 10-year Treasuries, which have fallen on concerns of a slowing global economy. As the key U.S. spring buying season gets going, low borrowing costs will help fuel demand for the short supply of homes on the market, according Keith Gumbinger, vice president of mortgage-data company HSH.com.
“To the extent they incentivize more wannabe homebuyers into the marketplace, that only puts more upward pressure on prices,” he said in an interview Wednesday.
Purchases of existing homes decreased in all four major regions of the country in February, led by a 17 percent monthly plunge in the Northeast, as a lack of inventory limited transactions, according to the National Association of Realtors.
The average 30-year rate has been below 4 percent since the start of the year and is approaching the lowest level since 2013. It reached a record of 3.31 percent in November 2012.
Mortgage rates are unlikely to spike anytime soon. Federal Reserve Chair Janet Yellen said last week that caution in raising U.S. interest rates is “especially warranted” as the global economy presents heightened risks.
Matthew Pointon, U.S. economist for Capital Economics Ltd., said he expects two Fed rate increases this year as the American economy shows strength, leading to a slight rise in borrowing costs.
“The improving economy and inflationary pressure will force the Fed to act,” Pointon said in a phone interview Thursday. But rates “will remain low for a long time. I don’t think mortgage affordability will be a huge issue.”