Mortgage rates fell this week, with the average 30-year fixed mortgage rate dropping to 6.2 percent. According to Bankrate.com's weekly national survey, the average 30-year fixed mortgage has an average of 0.4 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing retreated to 5.95 percent, while the average jumbo 30-year fixed rate was down slightly to 7.61 percent. Adjustable mortgage rates were sharply lower, with the average 1-year adjustable-rate mortgage down to 5.89 percent and the average 5/1 adjustable-rate mortgage pulling back to 6.21 percent.

Bankrate reported that mortgage rates remain volatile, yo-yoing up and down from one day to the next. The company said that heightened economic worries pushed mortgage rates lower versus last week, but the continued twists and turns of the credit crunch are certain to produce more volatility in mortgage rates. Although mortgage rates are pegged to long-term Treasury yields, the spread above risk-free Treasury yields is ever-changing as credit worries prevail. The movement of fixed mortgage rates is not directly influenced by the Federal Reserve's cut to short-term interest rates.

"Longer-term mortgage rates fell for the first time in three weeks, roughly following bond market yields," said Frank Nothaft, Freddie Mac's vice president and chief economist. "Meanwhile, the latest housing market data showed some pickup in home purchase activity in August. Pending existing home sales in August rose 7.4 percent, reflecting the largest monthly increase since October 2001, and July’s figures had an upward revision, according to the National Association of Realtors."

"More recently mortgage applications for both home purchases and refinancing grew slightly over the week ending October 3rd, reversing a two-week decline, based on figures from the Mortgage Bankers Association."

This year has been a wild ride for mortgage rates, with a low in January of 5.57 percent and a high of 6.77 percent in July. At today's rate of 6.20 percent, a $200,000 loan carries a monthly payment of $1,224.94.