Mortgage rates fell, sending costs for 30-year loans to the lowest since early February as the Federal Reserve confirmed its commitment to provide support for the economic recovery.
The average rate for a 30-year fixed mortgage was 4.27% this week, down from 4.34% a week ago, according to a statement today from Freddie Mac. The average 15-year rate dropped to 3.33% from 3.38%, the McLean, Va.-based mortgage-finance company said.
The central bank has been scaling back bond purchases that have bolstered the housing market by keeping interest rates low. Federal Reserve Chair Janet Yellen said yesterday that support will continue even as policy makers see the economy reaching full employment by late 2016.
“These speeches from Yellen are meant to remind the public that the exit will be slow, not that it will not happen,” Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, said in a note to clients yesterday.
The U.S. jobless rate was 6.7% in March, more than a percentage point higher than policy makers’ estimate for full employment of 5.2 to 5.6%, according to Yellen.
Slow wage growth, higher home prices and tight credit are contributing to a slowdown in the real estate recovery.
Builders began work on fewer homes than economists expected in March and permits for future projects declined. Housing starts climbed 2.8% from February to a 946,000 annualized rate, Commerce Department data showed yesterday. Economists expected an increase to 970,000.