Disappointing economy pushes real estate rates lower

30-year fixed drops to 5.8% in Freddie Mac survey
Mortgage rates fell for the third consecutive week as fears of an economic slowdown increased, according to surveys conducted by Freddie Mac and Bankrate.

In Freddie Mac's survey, the 30-year fixed-rate mortgage averaged 5.8 percent for the week ended today, down from last week when it averaged 5.91 percent. The average for the 15-year fixed-rate mortgage this week is 5.36 percent, down from last week when it averaged 5.46 percent. Points on both the 30- and 15-year averaged 0.5.

The five-year, Treasury-indexed, hybrid adjustable-rate mortgage averaged 5.22 percent this week, with an average 0.6 points, down from 5.31 last week. The one-year Treasury-indexed adjustable-rate mortgage averaged 4.26 percent this week, with an average 0.6 point, down from last week when it averaged 4.3 percent.

Interest rates in general have been oscillating with every piece of economic news released lately, said Frank Nothaft, vice president and chief economist. The market is switching its focus between the strength of the economy and the fear of inflation. Thus, although mortgage rates have dropped the last two weeks, that doesn’t necessarily indicate a trend.

That said, April’s mortgage rates are currently lower than those of the previous month. And lower mortgage rates will undoubtedly have a positive influence on housing activity.

In Bankrate.com's weekly survey, mortgage rates fell to the lowest point in two months, and have now dropped four weeks in a row. The average 30-year fixed-rate mortgage dropped from 5.95 percent to 5.86 percent, Bank rate.com reported. The 30-year fixed-rate mortgages in this week's survey had an average of 0.3 discount and origination points.

The 15-year fixed-rate mortgage, popular for refinancing, declined by an even larger margin, falling from 5.55 percent to 5.42 percent. Meanwhile, the average rate for the jumbo 30-year fixed-rate mortgage retreated from 6.13 percent to 6.03 percent. Adjustable-rate mortgages dropped also, with the average 5/1 adjustable-rate mortgage falling from 5.41 percent to 5.31 percent, while the one-year ARM retreated from 4.69 percent to 4.61 percent.

Disappointing economic data spurred another decline in mortgage rates, according to Bankrate.com. Lackluster retail sales and a nearly 18 percent drop in housing starts fueled fears of a broader economic slowdown. Investors responded by moving cash into long-term government and mortgage-backed bonds, pushing yields lower. Mortgage rates are closely related to yields on long-term bonds, which fluctuate with changing outlooks for inflation and the economy.

The following is a sampling of Bankrate's average 30-year-mortgage interest rates this week in some U.S. metropolitan areas.

New York: 5.88 percent with 0.15 point
Los Angeles: 5.88 percent with 0.43 point
Chicago: 5.92 percent with 0.03 point
San Francisco: 5.89 percent with 0.24 point
Philadelphia: 5.84 percent with 0.22 point
Detroit: 5.82 percent with 0.25 point
Boston: 5.94 percent with 0.1 point
Houston: 5.81 percent with 0.6 point
Dallas: 5.87 percent with 0.43 point
Washington, D.C.: 5.76 percent with 0.59 point