Mortgage rates fall for third straight week

NEW YORK (CNNMoney.com) -- Mortgage rates fell for the third straight week after rising substantially over the previous two months, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the average rate on a 30-year fixed-rate loan declined to 6.59 percent for the week ending August 9, 2007 - from 6.68 percent last week.

Last year at this time, 30-year mortgage rates averaged 6.55 percent.

Freddie Mac said the decline was partially due to higher unemployment recently.

"Job creation fell short of market expectations, with 92,000 jobs added in July, the smallest gain since February, and June's number was revised down by 6,000. In addition, the unemployment rate ticked up for the first time in four months to 4.6 percent," said Frank Nothaft, Freddie Mac's (Charts, Fortune 500) chief economist.

The loan buying company said a recent dramatic drop in home refinancing was likely due to tighter lending standards and cooling home prices.

"Freddie Mac reported that the amount of home equity cashed out through refinancing totaled $76.7 billion in the second quarter. Although slightly higher than the previous quarter's level, it still reflected a drop of $24.5 billion compared to the same quarter last year," said Nothaft. "Both the tightening of underwriting standards and slackening house price appreciation are possible contributing factors to the decline."

In its latest report, Freddie Mac said that rates on 15-year fixed-rate loans averaged 6.25 percent in the latest week, down from 6.32 percent last week. A year ago, the 15-year rate averaged 6.20 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 6.33 percent this week, up from 6.29 percent last week.

A year ago, the 5-year ARM averaged 6.21 percent.

One-year ARMs averaged 5.65 percent this week, up from 5.59 percent last week. At this time last year, they averaged 5.69 percent.