Sharp Fall in Mortgage Rate This Week

This week Mortgage rates fell sharply with long term rates dropping to the lowest level in more than two years. The recent volatility and turbulence in stock markets have prompted many investors to rush to the safety of U.S. Treasury securities, driving down the yields on bonds. Increased worries about a recession originating from credit crunch and a severe slump in housing market have also acted behind the fall of the mortgage rate.

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage went down to 6.10% from last week's average of 6.20%. The rate was 6.48% one year back. The current rate is the lowest since the week of Oct. 13. 2005, when rates stood at 6.03%. A year ago, 30-year mortgages stood at 6.14%.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, slid to 5.73%, from 5.83% last week. This week's rate hasn't been lower since the week ending Jan. 26, 2006, when 15-year rates averaged 5.70%. Rates on 15-year mortgages were at 5.87% a year ago.

The 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) also changed to 5.84% -- only a little bit from last week's average of 5.86%. One-year Treasury-indexed ARMs averaged 5.43%, up slightly from 5.42% of last week. The five-year ARMs averaged 5.95% and one-year ARMs were at 5.46% at this time last year.