February 14, 2019 / 6:23 PM / 3 months ago

UPDATE 1-U.S. 30-year mortgage rates hit 12-month low -Freddie Mac

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NEW YORK, Feb 14 (Reuters) - Interest rates on U.S. 30-year, fixed-rate mortgages fell to a 12-month low in step with lower U.S. bond yields on signs of slowing economic growth and the view inflation would remain muted, Freddie Mac data released on Thursday showed.

Thirty-year mortgage rates averaged 4.37 percent in the week ended Feb. 14, which was the lowest level since 4.32 percent in the week of Feb. 8, 2018. This was lower than the 4.41 percent the week before, the mortgage finance agency said.

“The combination of cooling inflation and slower global economic growth led mortgage rates to drift down to the lowest levels in a year,” Freddie Mac’s chief economist Sam Khater said in a statement.

The latest sign of a cooling economy was a 1.2 percent drop in domestic retail sales in December, marking their steepest monthly decline in more than nine years, the Commerce Department said on Thursday.

Benchmark 10-year Treasury yields were down over 4 basis points at 2.661 percent midday on Thursday, subsiding from a one-week high reached on Wednesday.

U.S. 10-year government debt yields have decreased from a 7-1/2-year peak of 3.26 percent in October.

Thirty-year mortgage rates crested at 4.94 percent in early November, which was their highest since March 2011.

In the latest week, interest rates on 15-year mortgages averaged 3.81 percent, down 3 basis points from a week earlier and from a year ago.

The average rate on five-year adjustable home loans decreased by 3 basis points to 3.88 percent. It was a quarter point higher than a year earlier, Freddie Mac data showed.

The current drop in borrowing costs, together with a solid job market, bodes well for the housing market in the coming months, Khater said.

“While housing activity has clearly softened over the last nine months and the lingering effects of higher rates from last year are still being felt, lower mortgage rates and a strong job market should rekindle demand for the spring homebuying season,” he said.

Reporting by Richard Leong; Editing by Jonathan Oatis and Andrea Ricci

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