Mortgage rates fell to the lowest level in a month after the International Monetary Fund’s cut to its global-growth outlook drove investors to the safety of the U.S. government bonds that guide borrowing costs.
The average rate for a 30-year fixed mortgage dropped to 4.12% from 4.19% last week, Freddie Mac said in a statement today. The average 15-year rate slipped to 3.3% from 3.36%, the McLean, Va.-based mortgage-finance company said.
Rates for 30-year fixed loans have fallen for three weeks after last month reaching 4.23%, the highest level since early May. U.S. home sales have been helped as historically low interest rates lure shoppers into the housing market.
“Gloomier news in the world has turned into the American buyer’s best friend,” said Keith Gumbinger, vice president of HSH.com, a Riverdale, N.J.-based mortgage-data firm. “That’s one of the reasons why mortgage rates arent getting any upward traction.”
Federal Reserve policy makers said at their last meeting that a global slowdown and a stronger dollar posed potential risks to the outlook for the U.S. economy. A number of participants said expansion “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to the minutes of the Sept. 16-17 Federal Open Market Committee meeting released yesterday.
While borrowing costs are low, lenders are continuing to tighten the credit vise on homebuyers after five straight years of economic expansion, imposing the toughest standards since at least 1998, according to a new index by research company CoreLogic Inc.
Credit availability for home purchases in May was about a third of what it was 16 years ago, according to Irvine, Calif.-based CoreLogic. The gauge uses 1998 as a baseline and considers six characteristics, including the share of borrowers with low credit scores.