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Mortgage rates steady despite market volatility

Mortgage rates were little changed, keeping borrowing costs close to the lowest level for the year.

The average rate for a 30-year fixed loan was 4.52 percent in the week ended Thursday, up from 4.51 percent last week, according to Freddie Mac. It is below where it was at the same time last year, when it averaged 4.56 percent.

The average 15-year rate rose to 3.66 percent from 3.65 percent a week ago. A year ago, it was 4.03 percent.

President Obama and Congress are under pressure to reach a deal before Aug. 2 to increase the amount of money the government can borrow. Investor concern that the U.S. credit rating may be downgraded spurred volatility in stock and bond markets during the week. Yields for 10-year Treasuries, a guide for mortgages and some other consumer loans, held below 3 percent.

“Investors have swallowed a lot of recent bad news,” said Patrick Newport, an economist at IHS Global Insights. “I guess the market just doesn’t believe that we’re going to shoot ourselves in the foot by having the government default.”

Tightened lending rules, an unemployment rate above 9 percent and a glut of distressed homes continue to hamper the housing market. Sales of previously owned homes dropped 0.8 percent in June to a 4.77 million annual pace, a seven-month low, the National Association of Realtors reported.

Mortgage applications rose in the week ended July 15 for the first time in a month, driven by homeowners seeking to reduce their monthly payments, the Mortgage Bankers Association reported. The group’s refinancing index jumped 23 percent. Its purchasing gauge was little changed.

— Bloomberg News


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