The average rate on a 30-year fixed mortgage in the United States fell last week to 5.85 percent, the seventh decline in eight weeks, after a government report that showed slower-than-expected job gains last month, Freddie Mac said.
The average 30-year loan dropped from 5.99 percent the previous week, according to Freddie Mac. The rate has fallen from an eight-month high of 6.34 percent reached in the second week of May. The rate also was 6.34 percent for the week at this time last year.
A Labor Department report earlier this month showed that employment growth slowed for a fourth straight month in July, with just 32,000 jobs created, the smallest gain this year. Mortgage rates move with yields on the U.S. 10-year Treasury note, which tumbled to their lowest level since April after the jobs report.
The "unexpectedly weak employment report caused interest rates on long-term Treasury bonds and, by extension mortgage rates, to fall as investors worried about the health of the U.S. economy," said Amy Crews Cutts, Freddie Mac's deputy chief economist.
Fannie Mae is the largest purchaser of U.S. mortgages, followed by Freddie Mac.
The job figures eased pressure on borrowing costs, which are forecast to rise as growth rebounds in the second half. The one-year adjustable rate mortgage (ARM) held at 4.08 percent, Freddie Mac said. The 15-year fixed rate fell to 5.24 percent from 5.40 percent.
Federal Reserve policy-makers raised the benchmark U.S. interest rate a quarter-point to 1.5 percent last week, the second increase in less than two months, to help suppress inflation.