NEW YORK (CNN/Money) - Mortgage rates dropped sharply this week, with the one-year adjustable rate mortgage hitting a record low, as a weaker-than-expected payroll report lowered the chance that the Federal Reserve will raise interest rates in the near future.

For the week ended March 11, the rate on 30-year fixed-rate mortgages averaged 5.41 percent, with an average 0.6 point payable up front, down from the previous week when it averaged 5.59 percent, according to mortgage finance firm Freddie Mac.

The 30-year averaged 5.61 percent a year earlier.

The 15-year mortgage fell to 4.69 percent from last week's average of 4.88 percent, also with 0.7 of a point payable up front. A year ago it was 4.93 percent.

The one-year adjustable rate mortgage (ARM) averaged 3.41 percent, with 0.6 of a point payable up front, versus 3.47 percent the previous week. A year earlier it averaged 3.68 percent. The marks the lowest level for the ARM since Freddie Mac began tracking it in 1984.

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Last Friday, the government said U.S. payrolls outside the farm sector grew by just 21,000 jobs in February, compared with a downwardly revised gain of 97,000 in January. The unemployment rate held steady at 5.6 percent.

Economists, on average, had expected 125,000 new jobs and unemployment at 5.6 percent, according to Briefing.com.

"As we had predicted earlier in the month, interest rates for 30-year fixed-rate mortgages edged closer to last year's record low figures," said Frank Nothaft, Freddie Mac chief economist. "For the year as a whole, we expect long-term rates may be even lower annually than they were in 2003."

"Families looking to lower their monthly payments even further might consider adjustable-rate mortgages (ARMs)," he added. "We predict ARMs will make up a much larger share of originations this year, perhaps the highest since about 1995."

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Freddie Mac's average mortgage rates are based on a survey of 125 lenders nationwide.

Freddie Mac (FRE: down $0.73 to $60.97, Research, Estimates), or Federal Home Loan Mortgage Corp., is a publicly traded company the government established in 1970 to provide a flow of funds to mortgage lenders. It buys mortgages from banks, bundles them and then resells them as mortgage-backed securities.

Its products, and the products of other similar entities, have become popular as an alternative to government-backed bonds, notably with international investors.