U.S. mortgage rates fell in the past week to the latest in a series of record lows as yields on government debt dropped, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company.
Rock-bottom rates offer a glimmer of hope for a housing market that has failed to find footing in the aftermath of the expiration of popular home buyer tax credits.
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.32 percent for the week ended September 2, down from the previous week's 4.36 percent and its year-ago level of 5.08 percent, according to the survey.
Thirty-year mortgage rates have fallen to fresh lows for 10 out of the past 11 weeks. Freddie Mac started the survey in April 1971.
Meanwhile, 15-year fixed-rate mortgages averaged 3.83 percent, down from 3.86 percent last week, the lowest since Freddie Mac began surveying this loan type in 1991. Fifteen-year mortgage rates have fallen to fresh lows for eight out of the past 11 weeks.
The 12-month price growth of core personal expenditures remained at 1.4 percent in July, which kept overall inflation expectations well at bay, Amy Crews Cutts, Freddie Mac deputy chief economist, said in a statement.
Federal Reserve Chairman Ben Bernanke reiterated this in an August 27 speech in Jackson Hole, Wyoming, saying that with inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly, she said.
As a result, mortgage rates eased further this week to new historic lows, she said.
Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.
(Editing by James Dalgleish)