Mortgage rates in the U.S. were
little changed, keeping borrowing costs close to the lowest
level on record as the housing market stagnates.

The average rate for a 30-year fixed loan declined to 4.10
percent in the week ended today from 4.11 percent, Freddie Mac
said in a statement. The average 15-year rate held at 3.38
percent, according to the McLean, Virginia-based mortgage-
finance company.

Buyers have been slow to take advantage of a drop in
borrowing costs that sent the 30-year rate to 3.94 percent this
month, the lowest level in Freddie Mac records dating to 1971.
Sales of previously owned homes, which make up more than 90
percent of the market, fell 3 percent to a 4.91 million annual
rate in September, the National Association of Realtors said
Oct. 20. The median price slid 3.5 percent from a year earlier.

“At this stage, the problem with the housing market is not
rates,” said Millan Mulraine, senior U.S. strategist at TD
Securities in New York. “The problem is potential homebuyers
continue to sit on the sidelines while waiting for more
attractive entry points for prices, and credit conditions
continue to be tight.”

The Mortgage Bankers Association’s home-loan applications
index rose 4.9 percent in the week ended Oct. 21 after plunging
15 percent in the previous period. The Washington-based group’s
purchasing gauge rose 6.4 percent last week, and its refinancing
index climbed 4.4 percent.

New-home purchases increased 5.7 percent in September to a
313,000 annual pace, figures from the Commerce Department showed
yesterday. The median price slumped 10 percent from September
2010, the biggest drop in more than two years.

To contact the reporter on this story:
Prashant Gopal in New York at
pgopal2@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net

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