Nov. 10 (Bloomberg) -- Mortgage rates in the U.S. were little changed, keeping borrowing costs near the lowest on record as home prices declined.
The average rate for a 30-year fixed loan dropped to 3.99 percent in the week ended today from 4 percent, Freddie Mac said in a statement. The average 15-year rate fell to 3.3 percent from 3.31 percent, according to the McLean, Virginia-based mortgage-finance company. The 30-year rate reached 3.94 percent last month, the lowest in Freddie Mac records dating to 1971.
The drop in borrowing costs has done little to spur home sales as as tighter lending standards, an unemployment rate around 9 percent and declining property values erode buyer confidence. The median price of a single-family home decreased in the third quarter from a year earlier in 111 out of 150 U.S. metropolitan areas measured by the National Association of Realtors, the group said yesterday.
“Low interest rates are having hardly any effect,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “They might help a little, but so little it doesn’t show up in the data. Maybe the data would be worse if mortgage rates were 5 percent.”
Sales of previously owned houses dropped 3 percent in September from the previous month to a 4.91 million annual rate, according to the Realtors. That was 32 percent below the peak pace in mid-2005.
Home-loan applications rose 10.3 percent in the period ended Nov. 4 from the prior week, according to a Mortgage Bankers Association index. The group’s refinancing measure climbed 12.1 percent, the biggest gain in almost two months, and the purchase gauge increased 4.8 percent.
--Editors: Christine Maurus, Rick Levinson
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