Mortgage rates plunged, sending borrowing costs for 30-year loans below 4% for the first time in 16 months, as signs of a slowing global economy drove investors to the safety of government bonds.
The average rate for a 30-year fixed mortgage
Mortgage rates are following a slide in 10-year Treasury yields as weaker-than-expected economic data from Germany to China combine with concern about a spreading Ebola virus, sparking demand for safe investments. Borrowing costs for home loans have fallen for four straight weeks, offering a break to buyers and giving owners a new opportunity to refinance.
"Domestically, there is no evidence that the economy is weakening in the manner of the rest of the world," said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York. Lower borrowing costs "will make it a more favorable environment for housing if the U.S. fundamentals hold up."
A gauge of mortgage refinancing jumped 10.6% last week, the most since early June, the Mortgage Bankers Association said yesterday. The share of home-loan applicants seeking to refinance climbed to 58.9%, the highest since mid-February, from 56.4%, the group said.
Rates for 30-year loans began rising from a near-record low of 3.35% in May 2013 after the Federal Reserve signaled it would start to unwind its stimulus plan aimed at keeping borrowing costs down. Traders cut bets that the Fed will raise interest rates by September 2015 to a 31% chance today from 78% odds at the end of last month, according to federal fund futures data compiled by Bloomberg.
