Rates for 30-year U.S. mortgages fell to the lowest level on record after Federal Reserve Chairman Ben S. Bernanke urged lawmakers to do more to revive housing.
The average rate for a 30-year fixed loan decreased to 3.89 percent in the week ended today, the lowest in records dating to 1971, from 3.91 percent, Freddie Mac said in a statement. The average 15-year rate dropped to 3.16 percent from 3.23 percent, according to the McLean, Virginia-based mortgage-finance company.
Bernanke, in a 26-page report to Congress last week, called the weakness in the property market a “significant barrier” to U.S. economic health and outlined possible ways to clear the glut of foreclosed properties, protect homeowners from default and help borrowers take advantage of low borrowing costs. While home prices continue to decline, demand is picking up amid improving consumer confidence and employment data.
“There’s a general economic improvement that is serving to promote home sales, and the low and stable mortgage rate environment plays into that very well,” said Keith Gumbinger, vice president of HSH Associates, a loan-data firm in Pompton Plains, New Jersey.
The U.S. unemployment rate unexpectedly fell to 8.5 percent in December, the lowest since February 2009, the Labor Department said last week. Confidence among consumers rose to an eight-month high, the Conference Board said Dec. 27.
New-home sales jumped to a seven-month high in November, according to Commerce Department figures released Dec. 23. Sales of existing homes rose in November to a 10-month high, the National Association of Realtors said Dec. 21.
Home-loan applications climbed 4.5 percent in the period ended Jan. 6, according to a Mortgage Bankers Association index. The Washington-based group’s measure of purchases rose 8.1 percent from a three-month low, while its refinancing index increased 3.3 percent.