Mortgage rates declined, decreasing home-loan costs as fewer Americans sought financing for purchases.
The average rate for a 30-year fixed mortgage was 4.29% this week, down from 4.33%, according to a statement today from Freddie Mac. The average 15-year rate slipped to 3.38% from 3.39%, the McLean, Va.-based mortgage-finance company said.
Housing demand has cooled as rising prices and tight credit have kept buyers on the sidelines. In the week ended April 25, applications for loans to buy homes dropped 4.4% and were down 21% from a year earlier, according to data from the Mortgage Bankers Association.
"The drop in applications was disappointing because, with interest rates steadily improving recently, it suggests a reluctance of homebuyers to take action," Bill Banfield, vice president at Detroit-based lender Quicken Loans Inc., said yesterday in a statement. "However, consumers in the market for a home may find it easier than they thought to purchase, with the added bonus of interest rates near historic lows."
Rates have declined since the beginning of the year, when the 30-year average was 4.53%.
The Federal Reserve said yesterday that the economy is rebounding after a weather-induced stall, allowing it to keep scaling back stimulus efforts that have kept interest rates low. The central bank pared monthly bond purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions in "measured steps" are likely.
Completed sales of previously owned homes fell for a third straight month in March to the lowest level since July 2012, according to the National Association of Realtors. Purchases of new houses tumbled to an eight-month low, Commerce Department figures showed last week.
Contracts to buy existing homes climbed by the most in almost three years in March, a sign that the market is starting to stabilize as it enters the key spring selling season, the Realtors group said three days ago.