Mortgage Rates on 30-Year U.S. Loans Fall to Record as home sales fall

July 1, 2010 15:29

Mortgage rates on 30-year U.S. loans slid to a record low for the second straight week, lowering borrowing costs for homebuyers as demand slumps.

By Prashant Gopal at

Rates for 30-year fixed loans sank to 4.58 percent in the week ended today from 4.69 percent last week, Freddie Mac said in a statement. The average 15-year rate fell to 4.04 percent, also a new low, the McLean, Virginia-based company said.

The decline in mortgage rates, fueled by investor demand for government-supported bonds tied to housing loans, has failed to lift U.S. home sales after the April 30 end of a federal tax credit for buyers. Purchases are more dependent on consumer confidence and employment than rates, said Cameron Findlay, chief economist at in Irvine, California.

The housing market “is not a rate discussion these days,” he said. “If you have an improvement in jobs, people have more disposable income and that will improve home sales.”

Confidence among U.S. consumers fell in June more than forecast as Americans became distressed over the outlook for jobs. The Conference Board’s confidence index declined to 52.9 last month from a revised 62.7 in May, according to a June 29 report. The unemployment rate was at 9.7 percent in May, compared with a 26-year high of 10.1 percent in October.

Home Sales Drop

The number of contracts to buy previously owned homes plunged 30 percent in May from the prior month, the biggest decline in records dating to 2001, the National Association of Realtors said today. The report followed Commerce Department data last week showing a 33 percent slide in new home purchases.


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