U.S. mortgage rates fell to a record low, reducing borrowing costs for homebuyers as sales slump after the expiration of a government tax credit.
Rates for 30-year fixed loans declined to 4.69 percent in the week ended today from 4.75 percent, mortgage-finance company Freddie Mac said in a statement today. The previous record was 4.71 percent, set in the week ended Dec. 3. The average 15-year rate was 4.13 percent, McLean, Virginia-based Freddie Mac said.
“The overall level of real estate activity is low, but low mortgage rates will help in generating some growth,” George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio, said in a telephone interview. “It’s going to be off very low levels.”
Borrowing costs have tumbled in the past two months as concern that a debt crisis in Europe may spread boosted demand for the safety of bonds including mortgage-backed securities. The lower rates have failed to lift housing demand, which has tumbled since a tax credit for first-time and certain other buyers expired at the end of April.