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Contained Inflation, Debt Ceiling Woes Nudge Rates Down

Mortgage rates were either flat or markedly down this week, depending on who you ask.

""Freddie Mac's"":http://www.freddiemac.com/ Primary Mortgage Market Survey registered little motion among rates for the week ending January 17. The average 30-year fixed rate slipped to 3.38 percent (0.7 point), down from 3.40 percent last week.

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The 15-year fixed rate averaged 2.66 percent (0.7 point), the same as in the previous week's survey. The 5-year adjustable-rate mortgage (ARM) also stood still, hanging at 2.67 percent (0.6 point).

Meanwhile, the 1-year ARM moved the most, sliding down to 2.57 percent (0.4 point) from 2.60 percent.

""Mortgage rates were flat to down a little this week amid reports that inflation remains contained,"" said Frank Nothaft, VP and chief economist at Freddie Mac. ""The overall producer price index rose 0.1 percent between November and December, below the market consensus [COLUMN_BREAK]

forecast, and the consumer price index was unchanged. For the year as a whole, consumer prices rose just 1.7 percent in 2012, almost half that of 2011's increase of 3.0 percent.""

""Bankrate.com"":http://www.bankrate.com/, on the other hand, reported more extreme shifts as markets grow increasingly nervous about the country's continued financial uncertainties.

According to Bankrate's weekly survey, the 30-year fixed average took a major dive, falling seven basis points to 3.60 percent. The 15-year fixed also dropped, ending the week at 2.89 percent (from 2.92 percent previously).

The 5/1 ARM saw its own decline, slipping to 2.74 percent from 2.77 percent in the last survey.

""The glow of the fiscal cliff deal is beginning to wear off, with mortgage rates now sliding back after a run-up to start the year. Although recent economic data has been pretty positive, the pace of the decline in bond yields and mortgage rates will likely pick up as nervousness about the debt ceiling debate increases,"" Bankrate said in a release.

While some ""analysts surveyed"":http://www.bankrate.com/news/rate-trends/mortgage.aspx say the severity of the debt ceiling issue is enough to drive rates down further, 54 percent of those who talked to Bankrate expect little change in the next week.

""Through the ├â┬ó├óÔÇÜ┬¼├ï┼ôfiscal cliff' and debt ceiling shenanigans, the Federal Reserve has managed to keep mortgage rates fairly steady. I draw two inferences from that: One, mortgage rates are where the Fed wants them. Two, the Fed is good at keeping mortgage rates where it wants them,"" said Holden Lewis, assistant managing editor for Bankrate.

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