Average U.S. rates on fixed mortgages declined this week for a third straight week. The low rates could give a boost to the spring home-buying season, which has gotten off to a slow start.
Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year loan eased to 4.20 percent, from 4.21 percent last week. The average for the 15-year mortgage fell to 3.29 percent from 3.32 percent.
Mortgage rates have risen nearly a full percentage point since hitting record lows about a year ago.
Warmer weather has yet to boost home-buying as it normally does. Rising prices and higher rates have made affordability a problem for would-be buyers. And many homeowners are reluctant to list their properties for sale.
Home sales and construction have faltered since last fall, slowing the economy. A harsh winter, higher buying costs and a limited supply of available homes have discouraged many potential buyers. Existing-home sales in March reached their lowest level in 20 months.
The increase in mortgage rates over the year was driven in part by speculation that the Federal Reserve would reduce its bond purchases, which have helped keep long-term interest rates low. Indeed, the Fed has announced four declines in its monthly bond purchases since December, because the economy appears to be steadily healing. But the Fed has no plans to raise its benchmark short-term rate from record lows.
Fed Chair Janet Yellen has told Congress that the economy is improving, but noted that the job market remains “far from satisfactory” and that inflation is still below the Fed’s target rate. She said she expects the Fed’s near-zero target for short-term rates to remain appropriate for a “considerable time” after the bond purchases end.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was unchanged from a week earlier at 0.6 points. The fee for a 15-year loan also remained at 0.6 points.
The average rate on a one-year adjustable-rate mortgage was steady at 2.43 percent. The average fee rose to 0.5 points from 0.4 points.
The average rate on a five-year adjustable mortgage fell to 3.01 percent from 3.05 percent. The fee declined to 0.4 points from 0.5 points.