The average rate on a 30-year fixed-rate mortgage declined to 4.04 percent from 4.09 percent a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.21 percent from 3.25 percent. As in recent weeks, mortgage rates followed the yield on the key 10-year Treasury note, which declined.
Bond yields for Treasury’s were pushed lower by a rise in bond prices.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan also held steady at 0.6 point.

With mortgage rates at low levels and the economic recovery in its sixth year, home-buying has recently surged as more buyers have flooded into the real estate market. Data issued Wednesday by the National Association of Realtors showed that Americans bought homes in June at the fastest rate in more than eight years, pushing prices to record highs as buyer demand has eclipsed the availability of houses on the market.

Mortgage rates still remain relatively low due primarily to near-zero short-term borrowing rates set by the Federal Reserve, as well as the present lack of investment opportunities for the excess sums in bonds and on deposit with the Fed. This allows homebuyers to borrow more mortgage funds with relatively unchanged incomes. However, mortgage rates will likely begin to increase steadily in late 2015 as the bond market anticipates the Fed’s inevitable short-term rate hike.

The median home price has climbed 6.5 percent nationally over the past 12 months to $236,400, the highest level — unadjusted for inflation — reported by the Realtors.

Sources: LA Times and Housing Wire

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