Zillow: Mortgage rates continue to drop

Mortgage rates continued to fall to ideal levels that complement the current homebuyer tax credits, as all major types of mortgages saw a decrease for the week ending January 17, according to the Zillow Mortgage Rate Monitor.

Average interest rates for 15-year fixed rate mortgages saw a sizable decline of 0.08 percentage points for the week, falling to 4.33 percent. The decline surpassed the 0.07 percentage point drop seen one week earlier to end a streak of sizable rate declines that had occurred throughout December 2009.

Likewise, average rates for 30-year FRMs declined as well, falling 0.05 percentage points to remain under 5 percent at 4.94 percent. The decline also followed up a 0.06 percentage point decline that had ended a streak of four weeks that had seen rate increases.

Average rates for 5-1 adjustable-rate mortgages saw the steepest decline of the week, shedding 0.13 percentage points to fall under 4 percent to 3.93 percent for the week. The prior week the shorter-term rates had seen a 0.09 percentage point decline.

Despite the drop in rates, the volume of mortgage requests remained about the same on a week-to-week basis. Thirty-two percent of all requests were for refinance loans, one percent higher than last week, while purchase loans remained the same at 66 percent.