U.S. mortgage rates were little changed, keeping borrowing costs near record lows after home prices gained the most in more than two years.
The average rate for a 30-year fixed mortgage was 3.35 percent in the week ended today, down from 3.37 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15- year rate held at 2.65 percent.
Home values are rising as low interest rates boost demand amid a tightening supply of properties on the market. House prices jumped 4.3 percent in the 12 months through October, the biggest year-over-year advance since May 2010, the S&P/Case- Shiller index of property values in 20 cities showed yesterday. Purchases of previously owned homes rose to a three-year high in November, the National Association of Realtors said last week.
“The recovery in sales activity is being built on the fundamentals of very favorable valuation and affordability metrics, an (albeit slowly) improving labor market and rising confidence among homebuyers,” Paul Diggle, property economist for Capital Economics Ltd. in London, wrote in a note to clients on Dec. 20.
Eighteen of the 20 cities in the S&P/Case-Shiller index showed increases from a year earlier, led by a 22 percent jump in Phoenix. Detroit followed with a 10 percent gain. Chicago and New York had declines.
The average 30-year mortgage rate dropped to a record 3.31 percent last month, according to Freddie Mac. The 15-year rate fell to 2.63 percent.
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