Mortgage rates declined for the third time in the past four weeks, with the average 30-year fixed mortgage rate dropping to 6.20 percent. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.32 discount and origination points.



The average 15-year fixed rate mortgage popular for refinancing fell back below the 6 percent mark, settling at 5.95 percent. On larger loans, the average jumbo 30-year fixed rate dipped to 6.41 percent. Adjustable rate mortgages were in on the act too, with the average 5/1 ARM sinking to 6.03 percent and the average one-year ARM sliding to 5.99 percent.


Mortgage rates have been slowly retreating in recent weeks, but the movement accelerated this week with more troubles in the subprime mortgage sector and a sharp one-day drop in the stock market. Both events had investors marching in double-time to the safety of long-term government bonds and the mortgage-backed bonds of prime, or top credit, borrowers. Mortgage rates are closely related to yields on long-term government bonds. The last time mortgage rates were this low, Santa was loading up the sleigh. This week's drop put the average 30-year fixed mortgage rate at the lowest point since Dec. 20.


Fixed mortgage rates are notably lower than last summer when the Fed last raised interest rates. At the time, the average 30-year fixed mortgage rate peaked at 6.93 percent, and a $165,000 loan carried a monthly payment of $1,090.00. With the average 30-year fixed rate now 6.2 percent, the same loan originated today would carry a monthly payment of $1,010.57. Fixed mortgage rates are a compelling refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.