By Ashwin Seshagiri
U.S. mortgage rates for 30-year loans plunged to the lowest level in more than eight months as the nation’s economic recovery showed signs of faltering.
The average rate for a 30-year fixed loan dropped to 4.39 percent in the week ended today from 4.55 percent, according to Freddie Mac. The average 15-year fixed-loan rate decreased to a record 3.54 percent from 3.66 percent, the McLean, Virginia- based mortgage-finance company said in a statement.
The decline followed a slide in yields for 10-year Treasury notes, which touched the lowest level since November yesterday on concern that the U.S. economy is slowing. Gross domestic product grew at a 1.3 percent annual rate in the second quarter, less than economists forecast, the Commerce Department said July 29. Reports this week showed an unexpected drop in consumer spending and slower-than-estimated growth in manufacturing.
“Two of the most important factors that influence mortgage rates are economic growth and inflation,” said Keith Gumbinger, vice president of HSH Associates, a loan-data firm in Pompton Plains, New Jersey. “The numbers show an economy that is stumbling far worse than expected. We’re pretty close to stall speed.”
The rate for a 30-year fixed mortgage is the lowest since the week ended Nov. 18, when it also was 4.39 percent. It fell earlier in November to 4.17 percent, the lowest in Freddie Mac records dating to 1971.
U.S. mortgage applications rose 7.1 percent last week, according to an index from the Mortgage Bankers Association in Washington. The group’s refinancing measure climbed 7.8 percent in the period ended July 22 from the prior week, and a gauge of purchases increased 5.1 percent.
To contact the reporter on this story: Ashwin Seshagiri in New York at firstname.lastname@example.org