Mortgage rates tumble back into record territory

NEW YORK (CNNMoney) -- Mortgage rates fell this week, with the 15-year fixed rate hitting yet another record low, amid news of weak job growth during the month of March.

Borrowers seeking 15-year mortgages, a popular choice for those looking to refinance, were rewarded with an average interest rate of just 3.11% this week, down from last week's 3.21% and more than one percentage point lower than a year earlier, according to Freddie Mac (FMCC, Fortune 500)'s weekly mortgage rate survey.

The rate on 30-year fixed mortgage also fell, to 3.88% from 3.98% the week before, just short of its own record low of 3.87%, set back in February.

The declines were a reversal from a few weeks ago when it appeared as if interest rates would start to creep up. Frank Nothaft, Freddie's chief economist, attributed the drop to concerns over the economy brought on by a weak jobs report for the month of March that was released last week.

The news sent Treasury yields tumbling. Mortgage rates closely track 10-year bonds.

"Although the unemployment rate fell to the lowest reading since January 2009, the overall economy added just 120,000 new jobs in March, nearly half that of the market consensus forecast," he said.

Mortgages are now an extreme bargain for homebuyers and those looking to refinance.

In 2006, when the housing market was booming, rates for a 15-year fixed loan averaged 6.07%. Monthly payments at that rate for a $200,000 mortgage came to $1,695, an extra $303 compared with payments based on this week's 15-year rate. Over the life of the 6.07% loan, the total interest paid would amount to $105,000, more than twice as much as current borrowers will pay. (See correction below.)

Those holding out for rates to fall even further, shouldn't wait any longer, according to Keith Gumbinger of HSH.com, a mortgage information company.

"For [rates] to continue to decline, we will need more signs that the economy is cooling and signals that the Federal Reserve will be taking new steps to support it," he said. "That seems unlikely."

Correction: The comparison of mortgage borrowing costs in 2006 with today was based on a 15-year loan, not a 30-year mortgage as stated in an earlier version of this article.