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NEW YORK, Feb 7 (Reuters) - Interest rates on U.S. 30-year, fixed-rate mortgages fell to a 10-month low in step with lower U.S. bond yields, prompted by concerns about weakening domestic growth and the Federal Reserve signaling it would pause with raising interest rates, Freddie Mac data released on Thursday showed.
The decline in borrowing costs raised expectations of a boost to U.S. home sales this spring, which is typically the busy time of the year for the housing industry.
“This is great news for consumers who will be looking for homes during the upcoming spring homebuying season,” Freddie Mac’s chief economist Sam Khater said in a statement.
Last year’s spike in mortgage rates, together with tight inventories, have hurt home sales. Domestic home resales fell 6.4 percent in December to an annualized rate of 4.99 million units, the weakest reading since November 2015.
Thirty-year mortgage rates averaged 4.41 percent in the week ended Feb. 7, which was the lowest level since 4.40 percent in the week of April 5, 2018. This was lower than 4.46 percent last week, but higher than 4.32 percent a year earlier, the mortgage finance agency said.
Last November, 30-year mortgage rates climbed to a 7-1/2 year peak at 4.94 percent.
“Mortgage rates are essentially similar to a year ago, but today’s buyers have a larger selection of homes and more consumer bargaining power than they did the last few years,” Khater said.
The average interest rate on 15-year fixed-rate mortgages slipped to 3.84 percent from 3.89 percent a week earlier. A week ago, it was 3.77 percent, Freddie Mac said.
Five-year adjustable-rate mortgage rates averaged 3.91 percent, down from 3.96 percent the week before. They averaged 3.57 percent a year earlier, it said.
Last week, benchmark 10-year Treasury yields fell 6 basis points, while five-year yields declined 8 basis points, Refinitiv data showed.
Reporting by Richard Leong Editing by Chizu Nomiyama and Susan Thomas