Average rate on 30-year loan falls to 4.23%

WASHINGTON — Average U.S. rates for fixed mortgages fell this week as the latest data continued to indicate a pause in the housing market's recovery.

Mortgage buyer Freddie Mac said Thursday the average rate for the 30-year loan declined to 4.23% from 4.32% last week. The average for the 15-year loan dipped to 3.33% from 3.40%.

Mortgage rates have risen about a full%age point since hitting record lows roughly a year ago. The increase was driven by speculation that the Federal Reserve would reduce its $85 billion a month in bond purchases. Saying the economy was gaining strength, the Fed pushed ahead last week with a plan to reduce the bond purchases, which have kept long-term interest rates low.

Data released Tuesday by real estate specialist CoreLogic showed that U.S. home prices slipped from November to December, and the year-over-year increase slowed, likely a result of weaker sales at the end of last year.

The December decline was the third straight month-to-month drop. Home prices had risen for eight straight months through September. For all of 2013, prices rose a healthy 11%.

The Commerce Department reported Monday that U.S. construction spending rose modestly in December, slowing from healthy gains a month earlier.

Most economists expect home sales and prices to keep rising this year, but at a slower pace. They forecast that both will likely rise around 5%, down from double-digit gains in 2013.

Steady job gains are putting more people to work and enabling them to buy a home. And rising prices should encourage more owners to sell their homes. A larger supply of available homes would likely boost sales.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The! fee for a 15-year loan rose to 0.7 point from 0.6 point.

The average rate on a one-year adjustable-rate mortgage fell to 2.51% from 2.55%. The fee increased to 0.5 point from 0.4 point.

The average rate on a five-year adjustable mortgage slipped to 3.08% from 3.12%. The fee held at 0.5 point.