Mortgage borrowing rates resumed their drop after a month of solid increases, according to Freddie Mac. The fixed 30-year home loan averaged 3.59%, down from a week ago when it was 3.66%. Adjustable rate mortgages also dropped, giving those shopping for mortgages a break.
Mortgage rates have seen their highest hike in more than a year over the past month after U.S. Treasuries rose as a result of economic unrest. Rates paid to investors, however, have slipped on Treasuries in the last week going into the Labor Day holiday weekend.
The fixed 15-year mortgage also fell, averaging 2.86% with an average 0.6 point, down from last week when it averaged 2.89%. The 5-year ARM fell two basis points to an average of 2.78%.
The lower rates should drive an increase in home refinancing, which had slowed after many lenders stopped taking applications for the governments Making Home Affordable refinance program, and rates spiked to the highest rates in several weeks
Homeowners seeking lower mortgage payments were refinancing at the fastest rate since early May prior to the slowdown.
The U.S. housing market has been making strides towards improving over the past several months, with higher home sales in July than during the previous month, according to the National Association of Realtors. “New home sales rose 3.6% in July matching May’s pace as the strongest month since April 2010,” said Freddie Mac chief economist Frank Nothaft.
Pending home sales also rose during the month to the best pace since April 2010. Near record low mortgage rates and lower home prices in the majority of the country are driving an increase in home sales, despite other troubles in the economy.