(Bloomberg) — US mortgage rates fell to a fresh one-year low, encouraging more homeowners to refinance and drawing prospective buyers into the market.
The contract rate on a 30-year mortgage fell 7 basis points to 6.3% in the week ended Oct. 24, according to Mortgage Bankers Association data released Wednesday. The group’s measure of refinancing jumped to the highest level since mid-September, and the index of home-purchase applications rose for the first time in five weeks.
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Mortgage rates track US Treasury yields, which dropped last week as declining oil prices eased concern about the inflation backdrop. Yields temporarily fell further after a belated report showed tame growth in US consumer prices last month, which encouraged bets that the Federal Reserve will cut interest rates beyond Wednesday’s widely expected reduction.
The drop in mortgage rates — if sustained — stands to potentially lull the housing market out of its years-long slumber. Sales of previously owned homes rose in September, and economists expect contract signings advanced then too, which would bode well for closings in the coming months.
The National Association of Realtors will release its report on September pending-home sales later Wednesday.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
—With assistance from Vince Golle.
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