Mortgage Rates Drop for Second Week

Average mortgage rates across the board sunk to a six-week low for the week ending July 9, according to a weekly survey released today by mortgage giant Freddie Mac (FRE: 1.14 -1.72%).

The average 30-year fixed mortgage rate dropped to 5.2% with an average 0.7 point, down from 5.32% from the previous week.

15-year FRMs averaged 4.69% with an average 0.7 point, slipping from 4.77% last week.

Five-year adjustable-rate mortgages (ARMs) also fell to 4.82% with an average 0.6 point from 4.88% a week ago. One-year ARMs mirrored the five-year, dipping to 4.82% with an average 0.6 point, dropping from 4.94% from last week.

The drop in the rates stems from a weakened labor market, said Frank Nothaft, vice president and chief economist of Freddie Mac, in the report.

Nothaft pointed to the 467,000 jobs lost in June, more than the market consensus, and the unemployment rate, which rose to 9.5%, the highest since August 1983.

A separate survey by Bankrate.com echoed the slide in mortgage rates. The 30-year FRMs fell to 5.59%. The average rate for 15-year FRMs fell to 4.93%, and 5-year ARMs dropped to 5.05%.

“The decline in mortgage rates happened alongside a slump in the price of crude oil,” says Bankrate.com’s Holden Lewis in weekly commentary on interest rates.

Lewis adds: “Both interest rates and oil prices can be seen as indicators that the economy continues to stumble, like a drunk trying to find his way out of a dark, unfamiliar saloon.

Write to Jon Prior.