The average rate on a 30-year, fixed-rate mortgage tumbled for a ninth straight week, to the lowest on record, as the government stepped up efforts to revive the housing market by reducing borrowing costs.
In the seven days ended Wednesday, rates dropped to 5.10%, from 5.14% in the previous week, Freddie Mac reported, the lowest level since it began compiling the data in 1971.
The U.S. economy shrank at a 0.5% annual pace in the third quarter, the Commerce Department said last week. Economists surveyed by Bloomberg News in December estimated that the economy would prove to have contracted at a 4.3% rate in the fourth quarter, the biggest decline since 1982, and would continue contracting for the succeeding two quarters. The U.S. jobless rate could reach 8.2% at the end of 2009, a 26-year high.
Tuesday, the Fed said it would use BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co., and Wellington Management Co. to manage the purchase of $500 billion of mortgage-backed securities it announced on Nov. 25.
The Mortgage Bankers Association’s index of loan applications to buy a home or to refinance, released Wednesday, rose to 1,245.7, the highest since 2003. The group’s purchase gauge climbed 1.4%, and the refinancing measure fell 0.4%.
October home prices in 20 U.S. cities tumbled 18% from a year earlier, the steepest fall on record, depressed by mounting foreclosures and slumping sales, according to an S&P/Case-Shiller report released Tuesday.