The latest report on rates for 30-year mortgages continued to falter last week to its lowest in a month causing investors to worry about the increased risk of a possible full blown economic recession.

Government sponsored mortgage agency Freddie Mac reported last week that 30-year, fixed-rate conventional mortgages averaged 6.07% for the week, down from the 6.17% posted the previous week and the lowest for 30-year mortgages since the Dec. 6 week when it reached its lowest in two years at 5.96%, the first time it was below 6 per cent for 2007.

Economists said that the decline was partly because of the lower than expected economic predictions. The Institute for Supply Management said that it’s keenly observed gauge of manufacturing activity dipped to its lowest level in almost five years.

Meanwhile, Freddie Mac’s chief economist Frank Nothaft said that the drop in the manufacturing index could possibly be an indication of a bigger economic downturn to start the year. Analysts are already predicting economic growth to hover around at a stagnant annual rate of 1.5% this winter and early spring as the economy reels from the effects of the feels the impact of the grim housing slump and credit crunch that started in August last year.

Nothaft expects sales of new and existing homes to be roughly 5.09 million in 2008, an 11% decline from a year ago.

Nothaft added that he predicts total home sales to continue dropping for the first quarter of this year before it gradually starts its slow recovery.

Freddie Mac added that other types of mortgage rates also suffered declines this week.

For the popular refinancing choice, 15-year mortgages, the rates dipped to 5.68% during the week, lower than the 5.79% posted the previous week. Furthermore, the rates on five-year adjustable-rate mortgages dropped to 5.78% from the 5.90% the week before. For one year adjustable-rate mortgages, its rates fell to 5.47% from the 5.53% its previous week.

Tighter credit standards have made it tougher for prospective buyers to obtain financing for a property or other major financial transactions to add to the already troubled housing market.

However, the mortgage rates did not include add-on fees known as points as 30-year, 5-year and 1-year mortgages each carried a nationwide average fee of 0.5 points while 15-year mortgages had a fee of 0.6 points.

Last year, 30-year mortgages were recorded at 6.18% while rates on 15-year mortgages were at 5.94%. Meanwhile, rates for five-year adjustable rate mortgages were 6.02% and one-year adjustable rate mortgages were at 5.42%.

Meanwhile, employment levels in the mortgage market dropped for December as several companies focused to other financial service areas although they worry that the losses would continue this year as the housing market continues to struggle.

According to a Bureau of Labor Statistics (BLS) report, there were 7,000 job cuts last month in credit intermediation which includes mortgage lending and related activities although November’s total was much higher at 13,000.

Since the industry peaked at February 2007, the total job losses have now affected 79,000 people while the nation’s construction industry has reached 236,000 in lost jobs since its peak in September 2006, according to the report.

Meanwhile, some of the biggest lenders are following suit as Countrywide Financial Corp announced that they would be laying 12,000 jobs off while National City Corp also announced 900 job cuts.

Washington Mutual Inc and Lehman Brothers Holdings Inc also announced job cuts last year.