NEW YORK - Interest rates on 30-year fixed-rate mortgages dropped in the latest week, according to real estate website Zillow.com on Tuesday, a move that bodes well for the hard-hit housing market as it copes with the absence of government support.
Lower interest rates on mortgages should buoy refinancing, putting more cash into consumers' hands to funnel into the economy. They also make homes more affordable during the spring selling season, the industry's most important period.
Mortgage rates for 30-year fixed mortgages, the most widely used loan, were 4.70 percent Tuesday afternoon, down from 4.79 percent compared to the same time last week, according to Zillow Mortgage Marketplace.
The 30-year fixed mortgage rate rose early Friday to around 4.82 before falling on Tuesday. The last time the 30-year fixed mortgage rate was at the current level was in early December 2009, Zillow said.
Fifteen-year fixed mortgage rates were 4.13 percent, down from 4.23 percent the week prior. Rates for 5/1 adjustable-rate mortgages, or ARMs, set at a fixed rate for five years and adjustable each following year, were 3.44 percent, down from 3.59 percent the week prior.
Recent robust housing data show the sector has benefited smartly from recently expired home buyer tax credits.
The Commerce Department said on Tuesday U.S. housing starts touched a 1-1/2 year high in April, but a drop in permits to a six-month low suggests it could only be a temporary reaction to tax-credit-induced demand.
Those seeking to take advantage of the $8,000 first-time home buyer tax credit or a $6,500 credit for home owners buying a new residence had to sign contracts by April 30 and have until June 30 to close the sales.
Zillow said their total volume of mortgage requests in the past week was up 4.4 percent from the prior week. Of last week's requests, 31 percent were for refinance loans, 67 percent were for purchase loans and 2 percent were for home equity loans