Bad economic news coupled with a steep Federal Reserve rate cut sent mortgage rates tumbling for the fourth straight week to an almost four-year low.

The average rate on a 30-year, fixed-rate mortgage fell to 5.48% during the week ended Thursday, according to a survey by Freddie Mac ( FRE). The rate hasn't been this low since March 2004.

Discount and origination fees dropped this week as well, falling to 0.4% from 0.5% of the total loan amount.

Over the past four weeks, 30-year mortgage rates have fallen by a cumulative 66 basis points. (A basis point is 1/100th of a percentage point.) That's the steepest four week decline since October 2003, according to Freddie's Primary Mortgage Market survey data.

But low rates may not be available to everybody. Banks, wary of keeping risky loans on their books, are reluctant to refinance subprime or jumbo loans.

The falling mortgage rates came on news of further weakness in the housing market: Housing starts fell almost 25% from 2006 levels, the largest annual decline since 1980, says Frank Northaft, Freddie Mac vice president and chief economist.

And the Fed's 75 basis-point rate cut was the largest since 1984. "As a result, mortgage rates continued trending down for the fourth consecutive week across loan products," Northaft says.

Other mortgage rates also were lower on the week.

Rates on 15-year fixed-rate mortgages fell 26 basis points to 4.95%, with an average point of 0.4%; rates on five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARMs, fell 27 basis points to 5.13%, with an average point of 0.4%; and the rates on one-year Treasury-indexed ARMs fell 27 basis points to 4.99% this week, an with average point of 0.6%.

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.

Mortgage Rates in Selected Cities
City Term Rate
Boston 30-year fixed 5.50%
New York 30-year fixed 5.13%
Ann Arbor 30-year fixed 5.63%
Chicago 30-year fixed 5.50%
Milwaukee 30-year fixed 5.63%
BankingMyWay.com
--no origination fee / 20% down payment / excludes Internet banks / excludes credit unions / loans under $417,000
For more rates, see BankingMyWay.com

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