The average mortgage interest rates in the U.S. fell after rising for two consecutive weeks with fixed rates declining lower than the figures recorded at the same time last year, according to Freddie Mac - the government-backed lending giant's weekly survey.
The survey revealed that the average 30-year-fixed mortgage rates were down to 4.14 percent this week after it rose to 4.17 percent last week. Last year, the rate was 4.46 percent at the same time.
The average 15-year-fixed mortgage rates also fell to 3.22 percent from last week's 3.30 percent. It averaged 3.50 percent at the same time last year.
The five-year adjustable mortgage rate averaged 2.98 percent, down from last week's 3.00 percent. The rate was 3.08 percent a year ago. The average one-year treasury-indexed adjustable mortgage rate also went down 0.4 points to 2.40 percent, down from last week's 2.41 percent, which was unchanged from the previous week.
Experts attribute the fall to the weak Gross Domestic Product data that was released by the U.S. Bureau of Economic Analysis Wednesday.
"Mortgage rates were down following the release of first quarter real GDP final estimate, which fell at a 2.9 percent annualized rate, a steeper than expected decline and the worst reading since the first quarter of 2009," Frank Nothaft, chief economist and vice president at Freddie Mac, said in a statement.
He added that the slowdown in home prices could also have triggered the mortgage rate slump.
"Also, the seasonally-adjusted S&P/Case-Shiller 20-city home price index [PDF] was up only 0.2 percent in April from the previous month. On a year-over-year basis, prices remained strong in April up 10.8 percent, but slower than the 12.3 percent in March."
Home mortgage applications also dropped 1 percent in the week ended June 20, the second successive decline after a sharp 9.2 percent fall in the previous week, according to the seasonally adjusted index provided by the Mortgage Banking Association.
Freddie Mac analysts recently released a report that claimed the housing recovery has some catching up to do and is coming back. Although the growth is slow and "choppy" - as most experts would call it - the economy and the housing market are both recovering.
Wednesday's GDP data triggered alarm among markets and investors. But economists assert that the data is no reason to fret.
"Despite the awful start to the year, the U.S. economy is nowhere close to recession," Sal Guatieri, senior economist for BMO Capital Markets, told CNN Money.
"The larger contraction in GDP in the first quarter is not a sign that the U.S. is suffering from a fundamental slowdown -- it was still largely due to the extreme weather," Paul Dales, senior economist with Capital Economics explained.
