Slowing economy drags down mortgage rates

NEW YORK (CNNMoney.com) -- Signs of a slowing economy, including a weak housing market and lower gross domestic product growth, helped edge mortgage rates down, according to a survey released Thursday.

The 30-year fixed rate mortgage averaged 6.18 percent, down from 6.22 percent last week, according to Freddie Mac's (Charts) Primary Mortgage Market Survey.

Last year at this time, the 30-year averaged 6.24 percent.

The 15-year fixed-rate mortgage averaged 5.92 percent, down from 5.97 percent last week. Last year at this time, it averaged 5.89 percent.

"Mortgage rates drifted lower last week largely on the basis of new economic information suggesting a slower economy and lower inflation," said Frank Nothaft, Freddie Mac vice president and chief economist.

"Real GDP growth for the last quarter was revised downward to a 2.2 percent annualized rate, compared to the 3.5 percent initially estimated, while the accompanying price measure showed that core inflation was tamer than first reported," he said.

"Home sales painted a mixed picture of January's activity. Continued weakness in the housing market was evidenced in January's new home sales, which fell by 17 percent from the previous month."

5-year adjustable-rate mortgages averaged 5.93 percent down from 5.96 percent the week before. Last year the 5-year ARM averaged 5.97 percent.

1-year ARMs averaged 5.49 percent, unchanged from last week. Last year, 1-year ARMs stood at 5.34 percent.

Nothaft said he expects a relatively difficult housing market in the first half of 2007. "While the overall trend is unclear, the housing market is likely to continue on its rocky path during the first half of 2007," Nothaft concluded.

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