U.S. mortgage rates drop sharply even as applications rise

WASHINGTON, March 28 (Xinhua) -- mortgage rates in the United States saw the biggest weekly drop in over a decade, the U.S. Federal Home Loan mortgage Corporation, commonly known as Freddie Mac, said on Thursday.

For the week ending March 28, 30-year fixed-rate mortgage (FRM) in the United States dropped 22 basis points to 4.06 percent, while the previous week's figure was 4.28 percent.

For the same period a year ago, the 30-year FRM averaged 4.4 percent, according to Freddie Mac.

"The Federal Reserve's concern about the prospects for slowing economic growth caused investor jitters to drive down mortgage rates by the largest amount in over ten years," said Sam Khater, chief economist of Freddie Mac.

Besides, Freddie Mac noted that 15-year FRM this week edged down to 3.57 percent, which was also lower than previous week's reading of 3.71 percent. For the same period a year ago, the figure was 3.9 percent.

"Despite negative outlooks by some, the economy continues to churn out jobs, which is great for housing demand. We have recently seen home sales start to recover and with this week's rate drop we expect a continued rise in purchase demand," Khater added.

Even as mortgage rates dropped, mortgage applications rose last week, mortgage Bankers Association (MBA) said on Wednesday.

The MBA's latest market composite index, a measure of mortgage loan application volume, rose 8.9 percent from a week earlier. The recent rise in mortgage application possibly signaled a strong start for the spring buying season.

Freddie Mac is a corporation founded by U.S. Congress, aimed at promoting the stability and affordability in the U.S. housing market by purchasing mortgages from banks and other loan makers. The corporation has been conducting weekly surveys on U.S. mortgage rate since April 1971.