The benchmark 30-year fixed rate mortgage rose to a rate of 4.79%, up slightly from the 4.78% of a week before according to the Freddie Mac Primary Mortgage Market Survey. This still represented more than a half percent lower rate than last year at this time.

The good news was in 15-year fixed rate loans where rates dropped to 4.20% which represents the lowest rate since Freddie Mac began to track this index in 1991.

The 5-year ARM rate averaged 3.94%, close to a full percentage point lower than a year earlier. One Year ARMs averaged 3.95%, unchanged from a week earlier.

The unexpected rate decline we have seen over the past three weeks has been driven both by weakness in European economies and fears of an evolving debt crisis. Furthermore, revised economic data inidcate the economy is growing far slower than was reported earlier in the year. Recent weak job growth numbers further moderated rates and caused a sell off in the stock market.

Lenders tend to be slow in dropping rates to respond to weakness in the markets and fast to increase them when positive economic news arises. As a result, it is always a good idea to lock in a low rate if you are within a week or two of your closing date as short term rate volatility is expected.