WASHINGTON – Average U.S. rates on fixed mortgages fell after three weeks of increases, edging closer to historically low levels.
Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year loan declined to 4.28 percent from 4.37 percent last week. The average for the 15-year mortgage fell to 3.32 percent from 3.39 percent.
A report released Tuesday by real estate data provider CoreLogic showed that U.S. home prices rose 0.9 percent in January after three months of declines, as a tight supply of properties likely supported prices despite slower sales.
“Prices are still growing at very high rates because the markets are still tight,” Patrick Newport, an economist with IHS Global Insight in Lexington, Mass., said in an interview with Bloomberg News. “We haven’t been building enough homes at high enough rates for five or six years.”
Economists say such outsize price gains might not continue much longer, however.
The harsh winter weather of recent weeks appears to have kept the economy in check. Sales of existing homes plunged in January to the slowest pace in 18 months, hit by the weather, higher interest rates and rising home prices. Signed contracts to buy existing homes have stayed flat for February and January, a sign that the weak sales could persist through March and April.
Mortgage rates tend to follow the yield on the 10-year Treasury note. The 10-year note traded at 2.71 percent Wednesday, up from 2.67 percent a week earlier.
Mortgage rates have risen about a full percentage point since hitting record lows roughly a year ago. The increase was driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases, which have helped keep long-term interest rates low. Deeming the economy to be gaining strength, the Fed announced in December and January that it was reducing its monthly bond purchases.