Mortgage Rates Roll Back From 2007 Highs

According to Freddie Mac's Primary Mortgage Market Survey for the previous week, the market has rolled back a small portion of the large increases in mortgage rates that were recorded over the prior five weeks.

The 30-year fixed-rate mortgage (FRM) which had increased from 6.15 percent to 6.74 percent between May 10 and June 14 retreated to 6.69 percent in the most recent week. Fees and points increased from 0.4 to 0.5 for the week.

The 15-year FRM decreased six basis points from its 2007 high of 6.43 percent the previous week to 6.37 percent. Fees and points increased from 0.4 to 0.5 for this product as well.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 6.31 percent for the week with an average 0.6 point. The previous week it averaged 6.37 percent with 0.5 point.

The biggest roll-back was in the one-year Treasury-indexed ARM which averaged 5.66 compared to 5.75 the week before. Points were unchanged at 0.7.

"Mortgage rates eased this week due to market concerns that the housing market will be a longer drag on the economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "May's housing starts fell for the first time in four months, while homebuilder optimism in June fell to a sixteen-year low."

"Thus far this year, the housing sector directly shaved 0.8 percentage points off real economic growth in the first quarter, compared to the 1.2 percentage points it lopped off growth in the second half of 2006."

Some of the usual information from the Mortgage Bankers Association survey was unavailable due to problems on their website. However it was reported that the interest rate on a 30-year FRM was unchanged at 6.60 percent for the week ended June 22.

The average contract interest rate for the 15-year FRM was down from 6.28 percent the previous week to 6.24 percent.

As with the Freddie Mac survey, the greatest change was the average contract interest rate on the one-year ARM which dropped 19 basis points to 5.51 percent.

Applications for mortgages were down 2.5 percent for refinancing and 4.9 percent for home purchases. Overall application volume was up 16.3 percent compared to the same week in 2006.

Refinancing represented 38.7 percent of all mortgage applications compared to 38 percent the previous week and adjustable rate mortgages gained a teeny bit more mortgage share at 20.4 percent of all mortgages compared to 24.3 percent a week earlier.