Mortgage interest rates dropped again this week according to the results of Freddie Mac’s Primary Mortgage Market Survey for the week ended July 9.

30-year fixed-rate mortgages (FRM) had an average rate for the week of 5.20 percent with 0.7 point, down from the previous week when it averaged 5.32 percent with 0.7 point.  This is the lowest rate for the 30-year mortgage since the week ended May 28 when the average was 4.91 percent.

The 15-year FRM dropped to an average of 4.69 percent from 4.77 percent last week.  Fees and points were unchanged at 0.7 point.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.82 percent with 0.6 point, down from last week when they averaged 4.88 percent with 0.7 point.

The largest decrease was logged by the one-year Treasury-indexed ARMs which dropped 12 basis points to an average of 4.82 percent.  Fees and points were unchanged at 0.6 point

Frank Nothaft, Freddie Mac vice president and chief economist said in a statement released by Freddie Mac, “Interest rates for 30-year fixed-rate mortgages fell for the second week in a row to the lowest level in six weeks amid market concerns over a weakening labor market.  The economy lost 467,000 jobs in June, more than the market consensus, and the unemployment rate rose to 9.5 percent, the highest since August 1983.  Moreover, hourly employee wages increased at an annual rate of 0.7 percent on average in the second quarter of 2009, the smallest gain since records began in 1964.

“The weak employment situation coupled with declining home values in many markets has added to greater defaults on home equity loans and lines of credit.  The American Bankers Association reported that the number of home equity loans that were 30-days or more delinquent rose to a record high of 3.52 percent in the first quarter and home equity lines of credit (HELOC) also reached a record of 1.89 percent.  Second liens and HELOCs totaled $1.1 trillion outstanding in the first quarter of 2009, representing nearly 10 percent of all home mortgage debt, according to the Federal Reserve Board.”

Fannie Mae’s report on its yields for the week ended July 6 was more mixed.

The conventional 30-year FRM which averaged 4.96 percent a week earlier was at 4.93 this week while the 15-year FRM increased fractionally from 4.34 percent to 4.35 percent.

Government guaranteed FHA and VA 30-year FRMs were down one basis point to 5.69 percent and one-year ARM’s increased from 3.15 percent to 3.27 percent.

All Fannie Mae averages are reported net of servicing fees.