(Adds quotes, background, details from survey)
By Julie Haviv
NEW YORK Oct 14 U.S. mortgage rates reached
new record lows in the latest week, according to a Freddie Mac
survey released on Thursday, as data showing economic weakness
fueled demand for safe-haven government debt.
Interest rates on U.S. 30-year fixed-rate mortgages, the
most widely used loan, averaged 4.19 percent for the week ended
Oct. 14, down from the previous week's 4.27 percent and the
lowest on record, according to the survey that began in 1971.
The 30-year fixed-rate mortgage has been under 5 percent
for 23 weeks in row. Rates were also below their year-ago level
of 4.92 percent, said Freddie Mac FMCC.OB, the second-largest
U.S. mortgage finance company.
While rock-bottom rates offer a glimmer of hope for a
housing market struggling to find footing in the aftermath of
the expiration of popular home buyer tax credits earlier this
year, their impact on demand for home purchase loans has been
tepid. A weak jobs market and flailing economy continue to
weigh on consumer confidence.
Meanwhile, 15-year fixed-rate mortgages fell to average
3.62 percent from 3.72 percent last week, the lowest since
Freddie Mac began surveying this loan type in 1991.
"September's employment report held no big surprises to
financial markets, allowing long-term bond yields and fixed
mortgage rates to continue to ease," Frank Nothaft, Freddie Mac
vice president and chief economist, said in a statement.
"As a result, both the 30-year and 15-year fixed mortgage
rates hit all-time record lows for the third consecutive week,"
Mortgage rates are linked to yields on Treasuries and
yields on mortgage-backed securities.
The Mortgage Bankers Association said on Wednesday mortgage
applications for home refinancing loans rose for the first time
in six weeks, with demand jumping to its highest level since
late August. For details double-click on [ID:nNLLCLE6JW].
An increase in refinancing may provide a jolt to the
economy as it could portend an increase in consumer spending.
By lowering monthly mortgage payments it may also help some
homeowners avoid default and foreclosure if their credit is
Michael Gapen, senior U.S. economist at Barclays Capital in
New York, said low mortgage rates have significantly improved
affordability, but believes a housing market recovery will be
elusive without a stronger labor market.
"The rise in refinancing activity is good for household
balance sheets and supportive of housing activity in general,"
"At this point a housing market recovery will largely
depend on the ability of the economy to create jobs and support
higher incomes for people," he said.
Freddie Mac said rates on 5/1 ARMs, set at a fixed rate for
five years and adjustable in each following year, was 3.47
percent, unchanged from last week, tying the all-time lowest
level since Freddie Mac began tracking this loan type in 2005.
One-year adjustable-rate mortgages were 3.43 percent, up
from 3.40 percent last week. A year ago, 15-year mortgages averaged 4.37 percent, the one-year ARM was 4.60 percent and the
5/1 ARM 4.38 percent. [ID:nWALELE6OQ]
(Editing by Chizu Nomiyama)