NEW YORK (Reuters) - Interest rates on standard U.S. 30-year mortgages dropped in the latest week to levels just shy of record lows as concerns of a deepening recession boosted the appeal of fixed-rate investments, Freddie Mac said on Thursday.
The average fixed 30-year mortgage rate declined to 5.04 percent in the week ending Thursday, from 5.16 percent in the previous period, Freddie Mac said in a statement. That was close to the 4.96 percent reached in mid-January, which was the lowest rate since Freddie Mac began its survey in 1971.
Yields on benchmark 10-year U.S. Treasury notes, which influence rates lenders offer to consumers, dropped as low as 2.65 percent this week from 2.99 percent in early February after bearish economic reports. Forecasts from the Federal Reserve for slower growth added to the negative tone, Frank Nothaft, Freddie Mac's chief economist, said in the statement.
"Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing, which reduces the future threat of inflation," Nothaft said.
Applications for U.S. home mortgages soared last week, nearing the levels last seen as rates dropped in early January, the Mortgage Bankers Association said on Wednesday. The 30-year rate as measured by the MBA fell to 4.99 percent in the week ending February 13.
Mortgage rates averaged the lowest in the northeastern U.S., at 4.92 percent, according to Freddie Mac's survey. Rates averaged the highest in the southwest, at 5.14 percent, it said.
All rates in the survey are based on up-front payments of about 0.7 percentage point of loan principal to the lenders
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