The benchmark U.S. mortgage rate rose last week, though it stayed below 7 percent for the fifth week in a row–the longest stretch at that level in almost five years, lender Freddie Mac reported.
The average rate on a 30-year fixed-rate mortgage increased to 6.94 percent in the week ended Friday, from the previous week’s 6.91 percent, according to a weekly survey of mortgage rates from the agency, Federal Home Loan Mortgage Corp.
The last time the 30-year mortgage rate stayed below 7 percent for five weeks or more was in 1993. Then, the 30-year rate stayed below 7 percent for 10 straight weeks, according to Freddie Mac. What’s more, the latest rate is close to the lowest since the week ended Jan. 16, when the 30-year mortgage rate was 6.89 percent, according to Freddie Mac.
“Since the latest economic news shows the economy slowing down, these low rates should remain in effect going into the future,” said Robert Van Order, chief economist at Freddie Mac.
The 30-year mortgage rate rose to 7.22 percent in the week ended May 1. That was the highest rate so far this year, according to Bloomberg analytics.
The latest report also showed that the average rate on an adjustable mortgage rose to 5.64 percent this week, up from 5.60 percent; the 15-year mortgage rate was unchanged at 6.60 percent.
Recent lows in mortgage rates have encouraged more people to purchase a new or old home. That will likely be evident in a government report next week.
Commerce Department figures to be released Tuesday are expected to show U.S. housing starts rose 1.9 percent in June to an annual rate of 1.559 million units, according to a Bloomberg News surveyed.
In May, U.S. sales of new homes rose to a record level, up 0.3 percent to 890,000 units at an annual rate, the Commerce Department said. May marked the ninth straight month the pace of sales was above an 800,000-unit annual pace, the longest stretch on record.
The National Association of Realtors reported U.S. sales of previously owned homes rose to near a record pace in May. Existing home sales increased 1.0 percent to a 4.82 million-unit annual rate last month, according to the NAR.
“Low interest rates and a strong economy are making Americans more confident that home ownership is within reach for them,” James A. Johnson, Fannie Mae chairman and chief executive officer, said in a statement. Such conditions make the public “less likely to believe that obstacles (to home ownership) stand in their way.”
Of Americans recently surveyed, only 29 percent cited “not having enough money for a down payment or closing costs” as a major obstacle to home ownership in 1998, down from its high of 52 percent in 1996.
U.S. mortgage applications fell in the latest week even as mortgage rates stayed below 7 percent, the Mortgage Bankers Association of America said.
The MBA’s mortgage applications index decreased 9.7 percent to 415.5 in the week ended July 10 from 460.1 the previous week. The refinancing index fell 11.2 percent to 1305.5 last week from 1470.6 the previous week, while the purchase index–which gauges demand for new houses–was down 8.3 percent to 262.5 from the previous week’s 286.4, the MBA said.
All the percentages are seasonally adjusted changes from the previous week’s level.
Since early January, the overall applications index has held above last year’s high of 348.3, reached during the last week of October.
The refinancing index stayed below its highest point for the year of 3115.8, reached during the third week of January. And the purchase index continues to range this year between 217.20, reached the second week of March, and 313.4, reached in late January.
