Home sales are crashing and investors are losing billions of dollars on bad home loans. All in all, it spells great news for mortgage rates.The benchmark 30-year fixed-rate mortgage fell 18 basis points to 6.31 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point.

The mortgages in this week's survey had an average total of 0.34 discount and origination points. One year ago, the mortgage index was 6.46 percent; four weeks ago, it was 6.49 percent.The benchmark 15-year fixed-rate mortgage fell 17 basis points to 6 percent. The benchmark 5/1 adjustable-rate mortgage fell 14 basis points to 6.12 percent. The 30-year fixed jumbo fell 20 basis points, to 7.04 percent -- the lowest it's been since late July.

This week's rate decline was steep, but it's not the record low for the year. In the middle of September, the benchmark rate on the 30-year fixed fell to 6.28 percent, and in March it slipped to 6.16 percent. Why rates declinedMortgage rates had been scooting downward for a week, and then came Wednesday morning's double-barreled blast from Merrill Lynch and the National Association of Realtors. Merrill Lynch announced that it would write down almost $8 billion in mortgage and mortgage-related assets.

Less than three weeks before, Merrill Lynch had said it expected to write down $4.5 billion in mortgage-related assets. That's quite a big change in just three weeks, and it startled investors. Stock prices fell abruptly, before recovering late in the day. Then the Realtors released the existing-home sales report for September.

Home resales last month fell 23 percent compared with the same month last year -- from 529,000 units sold in September 2006 to 409,000 units resold this September. On a seasonally adjusted basis, sales fell 19 percent. The inventory of unsold, used homes on the market reached 4.4 million units. At that sales pace, it would take 10½ months to sell all the houses now on the market.