Home-loan rates fell for the fifth straight week as Europe’s debt crisis increased demand for fixed-income investments and lowered borrowing costs.
The average U.S. rate for a 30-year fixed mortgage fell to 4.78 percent for the week ended today from 4.84 percent, Freddie Mac said today. It was the lowest level since touching a record 4.71 percent in December.
This week’s average 15-year fixed rate was 4.21 percent.
Concerns about rising government deficits and debt levels in Greece, Portugal and Spain have devalued the euro and sent equity markets tumbling around the world. The crisis is translating into lower home-loan rates for Americans because investors are fleeing to the refuge of U.S. bonds including mortgage-backed securities, said David Berson, the chief economist for PMI Group Inc. in Walnut Creek, California
“The more concern there is about Europe, the lower interest rates will go,” Berson, a former chief economist at Fannie Mae in Washington, said in an interview before the Freddie Mac report. The 30-year rate may touch a new record low in coming weeks, he said.
Applications to refinance home loans have jumped. The Mortgage Bankers Association’s refinancing index rose 17 percent in the week ended May 21, capping the biggest three-week gain in 14 months, the Washington-based trade group said in a report yesterday. Purchase applications fell to the lowest level since 1997 as the expiration of a federal homebuyer tax credit in April reduced sales.