Bankrate: Mortgage Rates Drop for Third Straight Week

Mortgage rates fell further this week, with the average 30-year fixed rate now at 6.17 percent, matching a low last seen on Jan. 25. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.3 discount and origination points. Mortgage rates are near their lowest point of the year, a sharp reversal from midsummer when rates crested at four-year highs.

The average 15-year fixed rate mortgage, popular for refinancing, retreated to 5.91 percent. On larger loans, the average jumbo 30-year fixed rate slid to 6.41 percent. Adjustable rate mortgages were mixed. The average 5/1 adjustable rate mortgage dropped from 6.11 percent to 6.01 percent and the average one-year ARM increased to 5.9 percent.

Evidence of weaker economic growth helped push mortgage rates lower once again. Weakness in orders for durable goods, consumer confidence, and home prices lured investors into bonds as a safe haven amid slower economic growth. Fed Chairman Ben Bernanke's comments on the possibility of resurgent inflation also contributed to lower bond yields as a vigilant Fed helps quell the inflation fears of bond investors. Mortgage rates are closely related to the yields on long-term government bonds.

Fixed mortgage rates are sharply lower than five months ago, when rates were flirting with 7 percent. At that time, the average 30-year fixed mortgage rate peaked at 6.93 percent, meaning that the monthly payment on a loan of $165,000 was $1,090. With the average 30-year fixed rate now 6.17 percent, the same loan originated today would carry a monthly payment of $1,007.36. Fixed mortgage rates are a compelling refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

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