U.S. mortgage rates fall

Fixed rate mortgages remain a bargain at the start of the spring-buying season in the United States. That's because the average rate on the 30-year mortgage dipped this week, while the 15-year loan fell to a new record low.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan ticked down to 3.88 per cent, from 3.90 per cent the previous week. That's slightly above the 3.87 per cent average rate hit three weeks ago, which was the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage fell to 3.13 per cent, from 3.17 per cent a week ago.

Rates on the 30-year loan have been below 4 per cent for three months. That has made home-buying and refinancing more attractive for those who can qualify.

The super-low rates are helping the housing market recover, albeit slowly. Home sales have been rising and the four-week average of home purchase applications was up in January and February, according to the Mortgage Bankers Association.

In recent months, other signs have emerged that suggest the troubled housing market could start to turn around this year.

Builders are more optimistic after seeing more people express interest in buying a home. Construction has picked up and builders are requesting more permits to build single-family homes. And the supply of homes on the market is falling, which could send home prices higher.

A key reason for the optimism is the improving jobs market. Employers have added an average 200,000 net jobs per month from November through January. That has helped lower the unemployment rate for five straight months to 8.3 percent, the lowest level in nearly three years. The latest employment figures will be released Friday.

Frank Nothaft, Freddie Mac's chief economist, said a typical U.S. family now has more than double the income needed to purchase a median-priced home. That's the first time that's happened since records on home affordability were first recorded in the 1970s.

Still, home prices continue to fall. Millions of foreclosures and short sales when a lender accepts less than what is owed on a mortgageremain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.

Economists say housing is years away from returning to full health.