US 30-year mortgage rates fall to 10-month low

New York

INTEREST rates on US 30-year, fixed-rate mortgages fell to a 10-month low in step with lower US bond yields, prompted by concerns about weakening domestic growth and the Federal Reserve signalling it would pause with raising interest rates, Freddie Mac data released on Thursday showed.

The decline in borrowing costs raised expectations of a boost to US home sales this spring, which is typically the busy time of the year for the housing industry.

"This is great news for consumers who will be looking for homes during the upcoming spring homebuying season," Freddie Mac's chief economist Sam Khater said in a statement.

Last year's spike in mortgage rates, together with tight inventories, have hurt home sales.

Domestic home resales fell 6.4 per cent in December to an annualised rate of 4.99 million units, the weakest reading since November 2015.

Thirty-year mortgage rates averaged 4.41 per cent in the week ended Feb 7, which was the lowest level since 4.4 per cent in the week of April 5 last year.

This was lower than 4.46 per cent last week, but higher than 4.32 per cent a year earlier, the mortgage finance agency said.

Last November, 30-year mortgage rates climbed to a 71/2 year peak at 4.94 per cent.

"Mortgage rates are essentially similar to a year ago, but today's buyers have a larger selection of homes and more consumer bargaining power than they did the last few years," Mr Khater said.

The average interest rate on 15-year fixed-rate mortgages slipped to 3.84 per cent from 3.89 per cent a week earlier. A year ago, it was 3.77 per cent, Freddie Mac said.

Five-year adjustable-rate mortgage rates averaged 3.91 per cent, down from 3.96 per cent the week before. They averaged 3.57 per cent a year earlier, it said.

Last week, benchmark 10-year Treasury yields fell 6 basis points, while five-year yields declined 8 basis points, Refinitiv data showed. REUTERS