US mortgage rates near three-month low in boost to demand

US MORTGAGE rates declined last week to an almost three-month low, sparking lending activity for home refinancing and purchases in a welcome sign for the struggling housing market.

The contract rate on a 30-year mortgage declined 15 basis points, the most since November, to 6.73 per cent in the final week ended February, according to Mortgage Bankers Association (MBA) data released on Wednesday (Mar 5).

Mortgage rates track Treasury yields, which have fallen in the past week as investors seek safety amid a selloff in stocks. Yields have also declined after recent data showed a weak start to the year for the economy.

MBA’s refinancing gauge jumped 37 per cent to the highest level since early October, while its index applications for home purchases advanced more than 9 per cent. The increase in purchase applications was the first since mid-January, after the MBA revised away the previous week’s gain.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG