Average long-term U.S. mortgage rates fell sharply last week amid concern over a labor market that has shown recent signs of weakness.
Mortgage giant Freddie Mac said Thursday that the average rate on a 30-year fixed-rate mortgage dropped to 3.76 percent from 3.85 percent a week earlier. The rate on 15-year fixed-rate mortgages declined to 2.99 percent from 3.07 percent.
Rates have stayed below 4 percent for 11 straight weeks. Last week’s decline brought rates to levels far below last year’s levels, providing an inducement for potential homebuyers. A year ago, the average 30-year mortgage rate was 4.19 percent, while the rate for 15-year loans was 3.36 percent.
A government report issued Oct. 2 showed that U.S. hiring slowed sharply in September, and job gains for July and August were lower than previously thought. That was a sour note for a labor market that had been steadily improving.
The Labor Department said employers added just 142,000 jobs in September, depressed by job cuts by manufacturers and oil drillers. The unemployment rate remained 5.1 percent, but only because more Americans stopped looking for work and were no longer counted as unemployed. All told, the proportion of Americans who either have a job or are looking for one fell to a 38-year low.
The tepid pace of hiring complicates the picture for the Federal Reserve, which is deciding whether to raise short-term interest rates this year for the first time in nine years.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage held steady from the previous week at 0.6 point.
The fee for a 15-year loan declined to 0.6 point from 0.7 point.
The average rate on five-year adjustable-rate mortgages fell to 2.88 percent from 2.91 percent; the fee was unchanged at 0.4 point. The average rate on one-year ARMs rose to 2.55 percent from 2.53 percent; the fee remained at 0.2 point.
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