Mortgage Rates Tumble

Mortgage rates have taken a "welcome plunge" over the past week, as the market shifted expectations about the Federal Reserve's future rate-target moves, Freddie Mac
(FRE) said Thursday.

The government-backed mortgage lender's weekly survey showed the both long- and short-term rates declined for fixed products as well as adjustable-rate loans.

A 30-year fixed-rate mortgage came with an average rate of 6.26% with an upfront payment of six-tenths of a point for the week ended Thursday. Those loans averaged 6.37% a week ago and 6.73% a year ago.

Shorter term, 15-year fixed-rate mortgages averaged 5.78% with an upfront payment of six-tenths of a point, compared with 5.91% a week ago and 6.38% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages cost 5.8%, on average, with an upfront payment of six-tenths of a point. Those mortgages averaged 5.82% a week ago and 6.35% a year ago.

One-year Treasury-indexed ARMs averaged 5.10% with an upfront payment of six-tenths of a point, down from 5.17% a week ago and 5.72% a year ago.

"Mortgage rates fell this week amid market speculation that the
Fed may not raise the overnight bank-lending rate this year after all," said Frank Nothaft, Freddie's chief economist.

Nothaft noted that weak retail sales and consumer sentiment affected market perceptions over the week, as well as Fed Chairman Ben Bernanke's testimony before Congress indicating "considerable uncertainty" about economic growth.

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