A market tonic?

Mortgage rates are posting big drops in recent days, ironically fueled in part by the financial markets turmoil over the blowup in the subprime mortgage sector.

The average rate for a 30-year fixed rate mortgage is down this week to 6.25 percent, from 6.42 percent, the Mortgage Bankers Association reported this morning; rates on 15-year fixed loans are averaging 5.90 percent, down from 6.10 percent. And one-year adjustable rate mortgages are being offered at 6.34 percent, down from 6.52 percent.

And Bankrate.com today reported even lower average rates based on its most survey.

Those are some big declines and the cheaper loan costs may help nudge a housing market that is steering into stiff headwinds. A credit crisis caused by investor losses on subprime loans has prompted many a lender to cut back, making it harder for even credit-worthy borrowers to get loans. Earlier this week a survey of mortgage brokers by market research firm Campbell Communications found that one-third of pending home purchases in August failed to close, for loan-related issues and other matters.

Mortgage rates have dropped in recent weeks as investors on Wall Street fled financial stocks and piled into bonds because of the subprime mess, and most recently, new worries about the health of the US economy. A rally in bonds pushes yields, which are used to determine mortgage rates, down.