Fixed U.S. mortgage rates fell the week that ended Thursday for the first time in four weeks, easing concern that higher borrowing costs would discourage refinancing.
The average 30-year rate was 5.38%, down from 5.59% a week earlier, Freddie Mac said Thursday. The 15-year rate averaged 4.89%.
The Federal Reserve Board said in March that it would buy as much as $1.25 trillion in mortgage securities to help drive down rates, expanding a previously announced plan. That program, along with a plan to buy as much as $300 billion in Treasuries, helped push rates to a record-low 4.78% twice in April.
Mortgage rates started climbing in May along with Treasury yields. The Fed's purchases of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and the Government National Mortgage Association had brought down yields on those securities, allowing lenders to reduce rates on new loans.
U.S. mortgage applications fell last week to the lowest since November as demand for refinancing slumped. The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan dropped 16%. Requests to refinance fell 23%.