U.S. mortgage rates declined to record lows, dropping borrowing costs after applications for refinancing rose for the first time in six weeks.
The average rate for a 30-year fixed mortgage dropped to an all-time low of 3.34 percent in the week ended today from 3.4 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate slipped to 2.65 percent, also a record, from 2.69 percent.
Mortgage rates at record lows have made refinancing more appealing and have helped the housing market recover by making purchases more affordable. Home prices are rising, in part because reduced interest rates help buyers afford more expensive properties, said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.
Low rates “are playing an important role in stabilizing prices,” Newport said in a telephone interview yesterday. “They also help refinancing and it means you can manage to cut down on your mortgage payments, and one thing you can do is spend money. You can use that money to buy Christmas gifts.”
The Mortgage Bankers Association’s index of home-loan applications climbed 12.6 percent in the week ended Nov. 9. The refinancing gauge jumped 13.1 percent, while the purchase gauge rose 11 percent. Applications rebounded in East Coast states after dropping two weeks ago when Hurricane Sandy hit, the Washington-based group said yesterday.
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