Two major economic stories this past week influenced mortgage rates favorably:
First, the news that China intends to slow down its economic growth to try and prevent inflation from getting out of control. In addition, the news of President Obama's proposed new restrictions on financial institutions and banks, which may impact their growth negatively.
Both of these measures are expected to lead to a slower economic growth in the US economy, which hurt the stock market but helped the fixed income (i.e. bonds) markets, which had a positive income on mortgage rates.