Mortgage rates down on weak economy

Gloomy economic readings drive rates downwards, eliminating last week's jump, according to the government-backed lender.

Last Updated: March 6, 2008: 11:42 AM EST

NEW YORK (CNNMoney.com) -- After a series of gloomy readings on the economy, mortgage rates fell this week in the slumping housing market, erasing last week's jump, Freddie Mac reported Thursday.

"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," Freddie Mac (FRE, Fortune 500) vice president and chief economist Frank Nothaft said in a statement.

"The housing market continues to take a toll on the rest of the economy," said Nothaft, who cited the recent tumble in residential construction and the largest annual drop in median home prices on record as examples.

The government-sponsored loan buyer said 30-year fixed-rate loans averaged 6.03% for the week ending Thursday, down from 6.24% last week.

Last year at this time, the 30-year rate averaged 6.14%, Freddie Mac said.

Freddie Mac also said 15-year fixed-rate loans averaged 5.47%, down from 5.72% last week. A year ago, the 15-year rate averaged 5.86%.

Rates on five-year adjustable-rate mortgages (ARMs) averaged 5.34%, down from 5.43% last week. A year ago, the 5-year rate averaged 5.90%.

One-year Treasury-indexed ARMs averaged 4.94%, down from 5.11% last week. At this time a year ago, the 1-year ARM averaged 5.47%.

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