Global Economic Woes Drag Mortgage Rates Down Further

It's been another down week for mortgage rates, which continued to sink as the economic picture dimmed overseas.

In a survey released Thursday, Freddie Mac reported that the 30-year fixed-rate mortgage (FRM) averaged a rate of 3.66 percent (0.6 point) for the week ending January 2015, a decline of 7 basis points from last week. Last year around this time, the 30-year FRM averaged 4.41 percent.

The week's decline put the 30-year fixed average at its lowest point since the week ending May 23, 2013.

The 15-year FRM also slid down to its lowest level since May 2013, averaging 2.98 percent (0.5 point) from last week's 3.05 percent.

"Mortgage rates fell for the third consecutive week as oil prices plummeted and long term treasury yields continued to drop despite a strong employment report," said Frank Nothaft, VP and chief economist at Freddie Mac.

While the headline employment numbers released for December—252,000 jobs added and a drop in the unemployment rate to 5.6 percent—the numbers underneath that were not as encouraging: Wage growth for all of 2014 was just 1.7 percent, while the labor force participation rate remains at its lowest in decades.

Meanwhile, global economic prospects are dicey, with much of the eurozone battling deflation. Earlier this week, the World Bank cut its forecast for global growth in 2015 following a disappointing 2014.

Bankrate.com said the slashed forecast is "testament to the ongoing worries gripping financial markets."

"These economic concerns, coupled with further declines in oil prices and renewed volatility in the stock market, brought bond yields and mortgage rates lower," the site said in its weekly interest rate survey.

As far as fixed mortgage rates go, Bankrate reported a 5 basis point drop for both the 30-year and 15-year fixed averages, bringing them down to 3.80 percent and 3.11 percent, respectively.

Adjustable rates also continued to slide. Freddie Mac reported that the 5-year hybrid adjustable-rate mortgage (ARM) averaged 2.90 percent (0.4 point) in the past week, while the 1-year ARM averaged 2.37 percent (0.4 point).

Bankrate's reading for the 5/1 ARM, meanwhile, was down 11 basis points to 3.09 percent.