(Bloomberg News) U.S. mortgage rates fell to the lowest in more than half a century as concern that the global economic recovery is faltering spurred demand for bonds that guide home loans, according to Freddie Mac.
The average rate for a 30-year fixed loan dropped to 4.15 percent in the week ended today from 4.32 percent, the McLean, Virginia-based mortgage financier said in a statement today. That was the lowest in more than 50 years, Freddie Mac said. The average 15-year rate fell to 3.36 percent from 3.5 percent.
The decline followed a slide in yields for 10-year Treasury notes, a benchmark for consumer debt including mortgages. The yield fell for a third day today, nearing a record low, after Morgan Stanley cut its forecast for global growth and concern grew that Europe's debt crisis may deepen. Lower rates have done little to boost home demand as the housing market stagnates.
"Low interest rates are helpful at the margins but it's indicating a lot of concerns about the economy," said Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Florida. "The move into Treasuries is driven by fear."
Sales of U.S. previously owned homes unexpectedly dropped in July, according to data released today from the National Association of Realtors. Purchases decreased 3.5 percent to a 4.67 million annual pace, the weakest since November. The median forecast of economists surveyed by Bloomberg News called for an increase in sales.
The lower mortgage rates are helping to boost refinancing as homeowners seek to lower their monthly payments, Frank Nothaft, Freddie Mac chief economist, said in the statement.
A Mortgage Bankers Association index of refinancing jumped 8 percent in the week ended Aug. 12, the Washington-based trade group said yesterday. The share of applicants seeking to refinance climbed to almost 79 percent, the largest since November. The group's purchasing gauge declined 9.1 percent to the lowest level in a year.