(Bloomberg) -- US mortgage rates dropped last week to the lowest level this year, but not enough to spur a rebound lending activity.
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The contract rate on a 30-year mortgage declined 5 basis points to 6.88% in the week ended Feb. 21, according to Mortgage Bankers Association data released Wednesday.
Mortgage rates track Treasury yields, which have fallen in the past week as investors seek safe havens amid a selloff in stocks and oil markets. Economic data have also contributed to the recent drop in yields, including weak January retail sales and an uptick in consumers’ long-run inflation views to the highest since 1995.
Even so, borrowing costs are still elevated — as are home prices — and weighing on lending activity. MBA’s gauge of refinancings fell 3.6%, while its index applications for home purchases barely rose.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
The government will release January data on new-home sales later Wednesday.
--With assistance from Liz Capo McCormick.
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