According a government report, home mortgage interest rates are slipping as the economic recovery remains in low gear. Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) reported today that the average interest rate for a 30-year fixed mortgage had dropped to 4.28%, slipping from 4.37% last week. The average rate for a 15-year fixed mortgage edged down to 3.32%, from 3.39% the previous week. These rates are taken from Freddie Mac’s weekly survey of what lenders are offering to borrowers with excellent credit.

Freddie Mac

For adjustable mortgages, the average start rate for a common ARM with a fixed rate for the first five years nosed down from 3.05% to 3.03%.

Freddie Mac: Rates rose on news of Fed taper

Mortgage rates began increasing in Oct last year when it became clear that the Federal Reserve would begin to taper its monetary stimulus policies. The Fed taper generally describes changing policy to end the large purchases of mortgage bonds and Treasury securities that has been going on for a year. The Fed’s “QE” program was designed to stimulate the economy by creating liquidity and maintaining a low long-term interest rate environment.

Slow economy capping interest rates

However, the 30-year fixed rate has gradually risen since the end of last year, and many economists point to a weak, inflation-less economic recovery as the main reason for the slippage. There has been steady improvement in the unemployment rate over the last few quarters, but economists point out that the these figures are somewhat skewed in that a large number of people have given up looking for jobs.

Furthermore, Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s chief economist, Frank Nothaft, was clearly cautious in his statements about the economy, pointing out that recent economic news included a downward revision in the fourth-quarter gross domestic product and a weak report on private sector job growth.