Mortgage rates dropped to the lowest level in more than a year and a half as falling oil prices and concerns about the strength of the euro drove investors to the safety of the U.S. government bonds that guide borrowing costs.
The average rate for a 30-year fixed mortgage
"The dip is sizable," Keith Gumbinger, vice president of HSH.com, a Riverdale, N.J.-based mortgage data company, said in a telephone interview. "Troubles beyond our borders have been, over the last few years, the friend of the American homebuyer."
The 30-year rate is the lowest since May 23, 2013, when it was 3.59%, Freddie Mac data show. U.S. housing demand has gotten a boost from borrowing costs that are close to record lows. Loan applications rose 11.1% in the week ended Jan. 2, the Mortgage Bankers Association said yesterday. That gain followed an 18.2% plunge the previous week that took the group's index to its lowest level in more than 14 years.
Investor demand for 10-year U.S. Treasuries, a benchmark for mortgage rates, caused their yields to fall for seven days before rising yesterday.
