Mortgage Rates for U.S. Loans Increase to Highest Since May
July 07, 2011, 10:24 AM EDTBy Ashwin Seshagiri
July 7 (Bloomberg) -- Mortgage rates in the U.S. increased to the highest level since May as demand for home loans slumps.
The average rate for a 30-year fixed loan increased to 4.6 percent in the week ended today from 4.51 percent, according to Freddie Mac. The average 15-year rate rose to 3.75 percent from 3.69 percent a week ago, the McLean, Virginia-based company said in a statement.
A drop in mortgage rates from this year’s high of 5.05 percent has done little to encourage demand for homes. Stricter lending standards and unemployment close to 9 percent are keeping buyers on the sidelines while mounting foreclosures, which sell at a discount, drag down values of all houses.
“I’d argue higher rates are not undesirable,” Cameron Findlay, chief economist at Lendingtree Inc. in Irvine, California, said in a telephone interview yesterday. “They bring price stability.”
Home prices fell 4 percent in April from a year earlier, the biggest drop in 17 months for the S&P/Case-Shiller index of property values in 20 U.S. cities. Sales of previously owned houses, which make up about 96 percent of the market, declined in May to a six-month low, according to the National Association of Realtors.
Applications for home loans loans decreased for the third straight week, led by the biggest decline in refinancing since the end of March, the Mortgage Bankers Association said yesterday. The Washington-based group’s refinancing measure dropped 9.2 percent while its gauge of purchases climbed 4.8 percent. The index for all applications fell 5.2 percent.
The rate for a 30-year fixed loan is above where it was last year at this time, when it averaged 4.57 percent, according to Freddie Mac. It fell to a record 4.17 percent in November.
--With assistance from Jillian Berman in Washington. Editors: Christine Maurus, Kara Wetzel
To contact the reporter on this story: Ashwin Seshagiri in New York at aseshagiri@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
