From Bloomberg:

Mortgage rates on 30-year U.S. loans slid to a record low for the second straight week, lowering borrowing costs for homebuyers as demand slumps.

Rates for 30-year fixed loans sank to 4.58 percent in the week ended today from 4.69 percent last week, Freddie Mac said in a statement. The average 15-year rate fell to 4.04 percent, also a new low, the McLean, Virginia-based company said.

The decline in mortgage rates, fueled by investor demand for government-supported bonds tied to housing loans, has failed to lift U.S. home sales after the April 30 end of a federal tax credit for buyers. Purchases are more dependent on consumer confidence and employment than rates, said Cameron Findlay, chief economist at Lendingtree.com in Irvine, California.

The housing market “is not a rate discussion these days,” he said. “If you have an improvement in jobs, people have more disposable income and that will improve home sales.”

Confidence among U.S. consumers fell in June more than forecast as Americans became distressed over the outlook for jobs. The Conference Board’s confidence index declined to 52.9 last month from a revised 62.7 in May, according to a June 29 report. The unemployment rate was at 9.7 percent in May, compared with a 26-year high of 10.1 percent in October.

Home Sales Drop

The number of contracts to buy previously owned homes plunged 30 percent in May from the prior month, the biggest decline in records dating to 2001, the National Association of Realtors said today. The report followed Commerce Department data last week showing a 33 percent slide in new home purchases.

The tax credit, worth as much as $8,000, helped fuel a rebound in demand last year and was extended and expanded in November. The credit required buyers to sign contracts by the end of April and close by June 30. The House of Representatives voted this week to push the deadline for closing to Sept. 30.

Mortgage rates have been declining since May as concern that a European debt crisis may spread pushed investors to the safety of Treasuries and government-supported bonds tied to home loans. Yields on Fannie Mae and Freddie Mac mortgage securities have fallen to the lowest level in more than a year.

The Mortgage Bankers Association’s index of U.S. mortgage applications jumped 8.8 percent for the week ended June 25. The Washington group’s refinancing gauge climbed 13 percent to the highest level since May 2009, and purchases declined 3.3 percent to the second-lowest level since 1997.

To contact the reporter on this story: Prashant Gopal in New York at Pgopal2@bloomberg.net.

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