Mortgage Rates Drop on Bad Economic News

Bad economic news took its toll on mortgage rates last week.

The average rate on a 30-year, fixed-rate mortgage fell 21 basis points to 6.03% with an average 0.5 point, according to Freddie Mac'sFRE Primary Mortgage Market Survey. (A basis point is 1/100th of a percentage point.)

The rate fell to just below its level two weeks ago, but remains 55 basis points above a nearly four-year January low.

"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," said Frank Nothaft, Freddie Mac vice president and chief economist.

Other rates also fell on the week.

Rates on 15-year FRMs fell 25 basis points to 5.47% with an average 0.5 point; rates on five-year Treasury-indexed hybrid adjustable-rate mortgages dropped 9 basis points to 5.34% with an average 0.5 point; and the rates on one-year Treasury-indexed ARMs fell 17 basis points to 5.11%, with an average 0.5 point.

Freddie Mac surveys lenders about rates on conventional mortgages of less than $417,000 to borrowers with good credit.

The survey doesn't reflect rates on jumbo loans of over $417,000 or loans to borrowers with weak credit.

Freddie Mac's numbers are averages. You can search for the best rates offered by lenders in your area on BankingMyWay.com. Just make sure you understand whether the lender is discounting the rate it quotes you by charging a "point," or fee, based on the size of the loan.