Mortgage rates in the U.S. were
little changed, keeping borrowing costs near the lowest on
record as home prices declined.

The average rate for a 30-year fixed loan dropped to 3.99
percent in the week ended today from 4 percent, Freddie Mac said
in a statement. The average 15-year rate fell to 3.3 percent
from 3.31 percent, according to the McLean, Virginia-based
mortgage-finance company. The 30-year rate reached 3.94 percent
last month, the lowest in Freddie Mac records dating to 1971.

The drop in borrowing costs has done little to spur home
sales as as tighter lending standards, an unemployment rate
around 9 percent and declining property values erode buyer
confidence. The median price of a single-family home decreased
in the third quarter from a year earlier in 111 out of 150 U.S.
metropolitan areas measured by the National Association of
Realtors, the group said yesterday.

“Low interest rates are having hardly any effect,” said
Patrick Newport, an economist at IHS Global Insight in
Lexington, Massachusetts. “They might help a little, but so
little it doesn’t show up in the data. Maybe the data would be
worse if mortgage rates were 5 percent.”

Sales of previously owned houses dropped 3 percent in
September from the previous month to a 4.91 million annual rate,
according to the Realtors. That was 32 percent below the peak
pace in mid-2005.

Home-loan applications rose 10.3 percent in the period
ended Nov. 4 from the prior week, according to a Mortgage
Bankers Association index. The group’s refinancing measure
climbed 12.1 percent, the biggest gain in almost two months, and
the purchase gauge increased 4.8 percent.

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