Sharp Drop in Mortgage Rate

This week mortgage rates fell sharply with long term rates dropping to the lowest level in more than two years. The 30-year fixed-rate mortgage fell to its lowest level since September 20.

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. At the same time, the nation's unemployment rate jumped to a two-year high of 5%. The National Association of Realtors also indicated a drop in its pending-home sales index for November, signaling a possible slowdown in December sales.

The recent movement in rates has inspired more homeowners to refinance in recent weeks. A 30-year fixed rate below 6% is indeed a bargain!

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage went down to 5.87% from last week's average of 6.07%. The rate was 6.48% one year back. A year ago, 30-year mortgages stood at 6.21%.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, slid to 5.43%, from 5.68% last week. Rates on 15-year mortgages were at 5.96% a year ago.

The 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) also dropped to 5.63% from last week's average of 5.78%. One-year Treasury-indexed ARMs averaged 5.37%, down from 5.47% of last week. The five-year ARMs averaged 6.08% and one-year ARMs were at 5.44% at this time last year.