May 8th, 2014 10:08 AM by Jackie A. Graves
Mortgage rates for 30-year loans fell to a six-month low, reducing
borrowing costs for homebuyers as the property market cools amid a slow
average rate for a 30-year fixed mortgage was 4.21% this week, down from 4.29%, according to a statement
today from Freddie Mac. The average 15-year rate dropped to 3.32% from 3.38%,
the McLean, Va.-based mortgage-finance company said.
Federal Reserve Chair Janet Yellen said yesterday that the
economy still needs stimulus five years after the recession ended as housing
demand slows. Rising property prices, along with mortgage rates that have
climbed from near-record lows a year ago, are cutting into buyer affordability.
U.S. home prices increased 11.1% in March from a year earlier, the 25th
consecutive gain, CoreLogic Inc. said this week.
"Readings on housing activity, a sector that has been
recovering since 2011, have remained disappointing so far this year and will
bear watching," Yellen said in testimony to the Joint Economic Committee
of Congress yesterday. "The recent flattening out in housing activity
could prove more protracted than currently expected rather than resuming its
earlier pace of recovery."
Completed purchases of previously owned U.S. homes fell
for a third straight month in March to the slowest pace since July 2012,
according to the National Association of Realtors. Sales of new houses dropped
to an eight-month low, Commerce Department data show.
Yellen repeatedly declined in her testimony to specify
when the benchmark interest rate might rise. The central bank’s policy of low
rates and a bond-buying program pushed the average rate for a 30-year home loan
to a near-record 3.35% last May. It has climbed since then as the Fed scales
back its stimulus plan.
Employment remains well short of the Fed's goals,
according to Yellen. While the jobless rate dropped in April to 6.3%, the
lowest since September 2008, the share of Americans who have been unemployed
for more than six months as well as part-time workers who would prefer
full-time positions "are at historically high levels," she said.