Mortgage rates fell sharply this week on softer economic news, Freddie Mac reported today.

The average rate on 30-year fixed-rate mortgages dropped 21 basis points from a week ago, dipping from 6.24 percent to 6.03 percent, and the average 15-year fixed mortgage tumbled from 5.72 percent to 5.47 percent.

Points, or fees that lenders charge for loan processing expressed as a percent of the loan, averaged 0.5 on the 30- and 15-year loans.

“Weak economic reports that indicated declines in the job market, slowing in manufacturing and low consumer confidence drove bond yields lower this week and mortgage rates followed,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement. “Interest rates for 30-year fixed-rate mortgages are now at the same levels as they were two weeks ago, erasing last week’s upward jump.

“Meanwhile, the housing market continues to take a toll on the rest of the economy. Residential fixed investment shaved 1.25 percentage points off economic growth in the fourth quarter of 2007. More recently, the median sales price of new homes fell 15.1 percent in January, representing the largest annual drop on record. Residential construction fell 19.7 percent over the 12 months ending January 2008, the largest decline since March 2007.”

According to Freddie Mac, the average rate on five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) sank to 5.34 percent from 5.43 percent a week ago, and average rates on one-year Treasury-indexed ARMs slid from 5.11 percent to 4.94 percent. Points on the 5- and one-year loans averaged 0.5.

Source: Inman News