WASHINGTON (AP) – Oct. 24, 2008 – Rates on 30-year U.S. mortgages dropped sharply this week, falling to the lowest level in five weeks.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.04% this week, down from 6.46% last week. The sharp decline pushed 30-year rates down to the lowest level since they stood at 5.78% the week of Sept. 18.

Analysts attributed the decrease to an easing of inflation concerns, which now have been replaced with rising worries that the country could be headed for a prolonged recession. Interest rates generally fall in periods of economic weakness.

Rates on 30-year mortgages hit a high for the year of 6.63% in late July and then dropped below to a seven-month low of 5.78% the week of Sept. 18.

According to the Freddie Mac survey, rates on other types of mortgages were mixed this week.

Rates on 15-year fixed-rate mortgages, which are popular with people who are refinancing, fell to 5.72%, compared to 6.14% last week.

Rates on five-year adjustable-rate mortgages fell to 6.06%, down from 6.14% last week. However, rates on one-year adjustable-rate mortgages rose to 5.23%, up from 5.16% last week.

The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages averaged 0.6 point. One-year mortgages averaged 0.5 point.

A year ago, the nationwide average rate on 30-year mortgages stood at 6.33%, 15-year mortgage rates averaged 5.99%, five-year adjustable-rate mortgages were at 6.03% and one-year adjustable-rate mortgages stood at 5.66%.

Source: FAR