Mortgage rates fell dramatically in the past week as economic concerns have gripped the financial markets in the weeks following the start of 2008. Freddie Mac reported today that 30-year fixed-rate mortgages averaged 5.69 percent for the week ending January 17, 2008, down from last week when the average rate was 5.87 percent. Rates are at their lowest level since July 2005, Freddie Mac said. Five-year Treasury-indexed hybrid ARMs averaged 5.21 percent this week, Freddie said, down further from last week’s previous low of 5.43 percent. Other mortgage products, including 15-year and one-year ARMs, also saw rates decrease. “The latest retail sales report indicated that shoppers scaled back spending in December, as retail sales declined by 0.4 percent from November’s level,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Particularly weak were sales of building materials, garden equipment and supply stores, which fell by 2.9 percent from the previous month. The declines aggravated concerns about the well being of the economy and exerted downward pressure on mortgage rates.” No wonder refinance applications are skyrocketing: the MBA reported earlier this week that refinancing activity jumped more that 40 percent in the past week.