Rates on 30-year mortgages drop for first time in two months

Rates on 30-year mortgages fell for the first time in two months as a weak jobs report eased concerns in financial markets about inflation.

In its weekly nationwide survey, mortgage giant Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages averaged 5.93 percent this week, down from 6.04 percent last week.

Last week's rate had been the highest since last July as rates rose for seven consecutive weeks, reversing five straight weeks of declines which had pushed the 30-year mortgage to a low of 5.57 percent on Feb. 10.

Analysts attributed this week's decline to a disappointing jobs report which showed the economy created only 110,000 jobs in March, according to a survey of businesses, the poorest showing in eight months and just half of what analysts had been expecting.

"Mortgage rates slipped this week on news that job creation in March came out much lower than had been expected," said Freddie Mac chief economist Frank Nothaft. "This would indicate there is less money being spent and therefore less inflationary pressure on the economy."

Nothaft predicted that future mortgage rate increases will be at a modest pace that will still translate into strong sales of both new and existing homes.

Rates on 15-year, fixed-rate mortgages fell to 5.48 percent this week, down from 5.58 percent last week.

Rates on one-year adjustable-rate mortgages fell to 4.23 percent this week, down from 4.33 percent last week.

Five-year hybrid adjustable rate mortgages averaged 5.33 percent this week, down from 5.43 percent last week. These hybrid mortgages have a fixed-rate for five years and then adjust each year after that.

The nationwide averages for mortgage rates do not include add-on fees known as points. All mortgage categories carried a 0.7 point fee this week.

A year ago, 30-year mortgages averaged 5.79 percent, 15-year mortgages were at 5.12 percent and one-year ARMs averaged 3.65 percent. Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.