Mortgage rates in the U.S. were little changed, keeping borrowing costs close to the lowest level for the year as talks dragged on for an agreement to extend the federal debt limit.
The average rate for a 30-year fixed loan increased to 4.52 percent in the week ended today from 4.51 percent, according to Freddie Mac. The average 15-year rate rose to 3.66 percent from 3.65 percent a week ago, the McLean, Virginia-based company said in a statement.
President Barack Obama and Congress are under pressure to reach a deal before Aug. 2 to increase the amount of money the government can borrow. Investor concern that the U.S. credit rating may be downgraded spurred volatility in stock and bond markets this week. Yields for 10-year Treasuries, a guide for some consumer loans, including mortgages, held below 3 percent.
“Investors have swallowed a lot of recent bad news,” Patrick Newport, an economist at IHS Global Insights in Lexington, Massachusetts, said in a telephone interview. “I guess the market just doesn’t believe that we’re going to shoot ourselves in the foot by having the government default.”
Demand for homes is constrained by stricter lending rules, an unemployment rate above 9 percent and a glut of distressed properties that’s dragging down values. Sales of previously owned U.S. homes dropped 0.8 percent to a 4.77 million annual pace, a seven-month low, the National Association of Realtors said yesterday.
Mortgage applications rose in the week ended July 15 for the first time in a month, driven by homeowners seeking to reduce their monthly payments. The Mortgage Bankers Association’s refinancing index jumped 23 percent, while the purchasing gauge was little changed, the Washington-based group said yesterday.
The rate for a 30-year fixed loan is below where it was last year at this time, when it averaged 4.56 percent, according to Freddie Mac. It fell to a record 4.17 percent in November.
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