The US mortgage rate has fallen to an 11-month low

U.S. mortgage rates fell to their lowest level in nearly a year last week, spurring a surge in refinancing activity and prompting would-be home buyers to start entering the market. Contract rates on 30-year fixed mortgages fell 15 basis points to 6.49 percent in the week ending Sept. 5, according to data released Wednesday by the Mortgage Bankers Association of America (MBA). Interest rates on 15-year fixed-rate loans and five-year adjustable-rate loans also fell to their lowest levels in about a year.
The drop was enough to push the MBA's index of mortgage activity, which covers home purchases and refinancing, to a three-year high. If funding costs continue to fall, it will provide much-needed support to a weak housing market. Residential construction has been a weak link in the US economy - a drag on gross domestic product in four of the past five quarters. The MBA's home purchase application index rose 6.6 per cent to its highest level since the first week of July. The refinancing measure rose more than 12 per cent to its highest level in almost a year.