The latest drop puts the average 30-year mortgage at the lowest level
since it stood at 6.24% in early March.

After hitting a four-year high 6.80% on July 20, rates on 30-year
mortgages have been trending down as financial markets became more
convinced that a slowing economy will help keep inflation contained.

Such a slowdown would allow the Federal Reserve to keep interest rates
on hold. Fed officials announced last week that they were leaving a key
interest rate unchanged for the second straight month.

Sharp declines this year in home sales and construction of new homes
have provided support for the view that the economy is slowing to a more
sustainable pace and eased worries about inflation.

Many analysts believe interest rates will hover around current levels
for the rest of the year. Such a development is expected to help the
housing industry level off after sharp declines in recent months that
have seen construction of new homes fall to the lowest levels in more
than three years and both new and existing homes experience price drops
when compared with prices a year ago.

“Both lower mortgage rates and a moderation in house price growth should
lead to increased housing affordability,” said Frank Nothaft, chief
economist for Freddie Mac.

Other types of mortgages showed declines this week as well.

Rates on 15-year, fixed-rate mortgages, a popular choice for
refinancing, averaged 5.98%, down from 6.06% last week.

For one-year adjustable-rate mortgages, rates dipped to 5.47% on
average, down from 5.54% last week.

Rates on five-year adjustable mortgages fell to an average 6.00% this
week, from 6.08% last week.

The mortgage rates do not include add-on fees known as points.
Thirty-year and 15-year fixed-rate mortgages both carried a nationwide
average fee of 0.4 point while one-year ARMs carried a fee of 0.6 point
and five-year ARMs carried an average fee of 0.5 point.

A year ago, 30-year mortgages averaged 5.91%, 15-year mortgages stood at
5.48%, one-year ARMs were at 4.68% and five-year ARMs averaged 5.44%.