Fixed mortgage rates broke a string of four consecutive increases, dipping this week in response to favorable news on the inflation front. The average 30-year fixed mortgage rate slid to 6.29 percent, according to Bankrate.com‘s weekly national survey of large lenders; 30-year fixed rate mortgages had an average of 0.27 discount and origination points, the online information service said. Average 15-year fixed rate mortgage rates inched lower to 6.02 percent, while the average jumbo 30-year fixed rate nosed higher to 6.59 percent. On adjustable rate mortgages, the average 5/1 ARM rate sank to 6.11 percent and the average one-year ARM held steady at 6 percent. Mortgage rates had increased in each of the four prior weeks, aided by comments from the Fed about the focus on taming inflation. But several inflation readings in the past week have served to calm the nerves of investors, and the upward momentum on Treasury yields and mortgage rates subsided.

As HW has noted in the past, fixed mortgage rates are closely related to yields on long-term government bonds. Both the Producer Price Index (PPI) and Consumer Price Index (CPI) showed tame advances at the core level that excludes volatile food and energy components, fueling optimism that the Fed won’t need to hike interest rates as a preventative. Also, the March reading on capacity utilization, cited by the Fed as a marker of inflation pressures, eased back. The alternating good news/bad news on the economy has kept mortgage rates in a narrow band of approximately one-eighth of a percentage point in the past two months. Fixed mortgage rates are notably lower than last summer when the Fed last raised interest rates, according to Bankrate.com. 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 6.29 percent, the same loan originated today would carry a monthly payment of $1,020.23. For more information, visit http://www.bankrate.com.