Mortgage rates dropped for the third consecutive week after the release of a disappointing labor market report and the Federal Reserve’s subsequent decision to discontinue its interest-rate hikes, according to surveys conducted by Freddie Mac and

In Freddie Mac’s survey, the 30-year fixed-rate mortgage fell to an average 6.55 percent this week, down from last week’s average of 6.63 percent. The average for the 15-year fixed-rate mortgage also sank from last week, falling from 6.27 percent to 6.2 percent.

Points, which are fees charged by lenders for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 15-year loans.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 6.21 percent this week, with an average 0.4 point, down from last week when it averaged 6.27 percent. The one-year Treasury-indexed ARM average remained at 5.69 percent, with an average 0.8 point.

“The weaker-than-expected jobs report combined with the Fed’s decision to pass on raising rates at its last meeting led directly to lower rates this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Interest rates for fixed-rate mortgages have dropped to levels last seen in the spring of this year.

“Lower rates may bring about a rise in refinancing activity as homeowners with ARMs getting ready to reset decide to take advantage by locking into a fixed-rate mortgage now rather than waiting until the adjustment date when rates may be higher.”

In’s survey, mortgage rates declined for the third week in a row and the fifth time in the last six weeks, as the Federal Reserve held interest rates steady for the first meeting since May 2004. The average 30-year fixed-rate mortgage fell to 6.57 percent, the lowest since April 19, according to’s weekly national survey of large lenders, and these loans had an average of 0.32 discount and origination points.

The average 15-year fixed-rate mortgage, popular for refinancing, dropped by a similar amount to 6.25 percent, reported. On larger loans, the average jumbo 30-year fixed rate declined to 6.79 percent. Adjustable-rate mortgages also backtracked, with the average 5/1 ARM sliding to 6.32 percent and the average one-year ARM retreating to 6.01 percent.

News of slower economic growth, such as a disappointing number of new jobs added in July, reinforced the Fed’s assertion that a cooling economy and the 17 interest-rate hikes already implemented would be enough to tame inflation, noted. As a result, the Fed’s record streak of 17 consecutive interest-rate hikes is over, buying the Fed some time to see if that scenario plays out. With the Fed casting aside inflation concerns and focusing on a slowing economy, the Fed followed the lead of the bond market. Yields on long-term government bonds, to which fixed mortgage rates are closely related, had been declining in anticipation of the Fed’s pause. But with inflation still very much an issue, this trend may not hold much longer. reported that fixed mortgage rates have fallen more than one-third of a percentage point since the Fed last hiked rates at the end of June. At the time, the average 30-year fixed mortgage rate was 6.93 percent, meaning that the monthly payment on a loan of $165,000 was $1,090. With the average 30-year fixed rate now 6.57 percent, the same loan originated today would carry a monthly payment of $1,051. With the recent pullback, fixed mortgage rates remain an attractive refinancing alternative for adjustable-rate borrowers facing sharp payment adjustments, said.

The following is a sampling of’s average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:

New York – 6.49 percent with 0.25 point

Los Angeles – 6.61 percent with 0.48 point

Chicago – 6.73 percent with 0.04 point

San Francisco – 6.63 percent with 0.25 point

Philadelphia – 6.45 percent with 0.46 point

Detroit – 6.66 percent with 0.03 point

Boston – 6.61 percent with 0.14 point

Houston – 6.54 percent with 0.38 point

Dallas – 6.52 percent with 0.47 point

Washington, D.C. – 6.43 percent with 0.68 point

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