The average 30-year fixed-rate mortgage tumbled 0.26% to 5.87% from a week earlier, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending March 20. The 30-year was also lower than 6.16% a year earlier.

Freddie said the average 15-year was 5.27%, down 33 basis points from the previous week.

A move by Freddie’s regulator, the Office of Federal Housing Enterprise Oversight, to ease capital surplus requirements and improve mortgage market liquidity impacted fixed rates, Freddie Chief Economist Frank Nothaft said in the report. Weaker price increases than expected in the Consumer Price Index also affected rates.

The 10-year Treasury yield, which tends to be followed by fixed mortgage rates, was 3.36% today, about 10 BPS better than last Thursday, data from CNNMoney indicate.

The Federal Open Market Committee announced a 75 BPS reduction in its target for the federal funds rate to 2.25% and an equal decrease in the discount rate to 2.50%. Weakening economic indicators, slowed growth in consumer spending and softening labor markets were cited in its decision. Contracting credit and a worsening housing market were projected to affect economic growth over the next few quarters — leaving the door open to further rate cuts.

Of the 100 mortgage bankers, mortgage brokers and other industry “experts” surveyed by Bankrate.com for the period March 6 to March 19, 44 project rates will fall more than 2 BPS during the next 35 to 45 days, 34 see no change, and 22 predict an increase.

Freddie projects the average 30-year fixed rate to bottom out at 5.9% this quarter then slowly ascend to 6.7% by the fourth quarter of next year.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.56% in Freddie’s latest survey, edging down from 5.58% a week earlier.

The average one-year Treasury-indexed ARM was 5.15%, Freddie reported, up 0.01%. The one-year Treasury average itself was 1.33% yesterday, about 25 BPS better than a week earlier.

Another ARM index, the London Interbank Offered Rate, or LIBOR, was 2.38% as of yesterday, compared to 2.74% seven days earlier, according to Bankrate.com.

The share of ARM applications tumbled to 8% from 16% the prior week, the Mortgage Bankers Association said in its survey for the week ending March 14.

Following a 10 BPS jump in the average 30-year last week, loan applications fell 3% from the previous week, MBA reported. The Market Composite Index currently stands at 652.0.

Refinances, which accounted for half of the latest figures, were down 5%, and purchases were off 3% — though government applications jumped 8%.