U.S. mortgage rates dropped in the past week, with fixed-rate loans either reaching or nearing record lows, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company.
Enticing mortgage rates could be the saving grace for the hard-hit U.S. housing market as it adjusts to the withdrawal of influential government support.
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.72 percent for the week ended June 10, down from the previous week's 4.79 percent, according to the survey.
That is lowest the rate since the week ended December 3, 2009, when it hit a record low of 4.71 percent. Freddie Mac started the survey in 1971. The rate is also sharply below its year-ago level of 5.59 percent.
Low mortgage rates caused home loan refinancing activity to surge throughout the month of May, putting more cash into consumers' hands to funnel into the U.S. economy.
However, ever since the April 30 expiration of popular home buyer tax credits, rates have failed to spur demand for loans to purchase a home. a trend that likely portends weak home sales.
Freddie Mac said the 15-year fixed-rate mortgage averaged 4.17 percent, down from 4.20 percent last week and the lowest since Freddie Mac started tracking the mortgage type in August 1991.
Following a relatively weak employment report, bond yields fell this week and mortgage rates followed, Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.
(Editing by Padraic Cassidy)