The near panic gripping Washington and most of the rest of the country served to stop the downward trend in mortgage interest rates which has been in play for the previous eight weeks when rates were either unchanged or declined.

According to the results of the Freddie Mac Primary Mortgage Market Survey which was released on Thursday, the 30-year fixed-rate mortgage (FRM) averaged 6.09 percent during the week ended September 25.  This was an increase of 31 basis points over the average the previous week.  Fees and points also increased from an average of 0.6 point to 0.7 point.  Interest rates had dropped every week since August 21 following three consecutive weeks when rates held steady at 6.32 percent.

The 15-year FRM averaged 5.77 percent with 0.6 point compared to the week ended September 18 when the average was 5.35 percent with 0.7 point.  The 15-year rate had dropped along with the 30-year starting on August 21.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMS) rose to an average of 6.02 percent with 0.6 point from 5.67 percent with 0.6 point a week earlier.

One-year Treasury-indexed ARMs averaged 5.16 percent, 13 basis points higher than the previous week.  Fees and points were unchanged at 0.5.

Both of the shorter-term ARMs had been fairly volatile in recent months so the sudden increase in rates last week were not reversing any long term trends.  The five-year hybrid had decreased each of the previous three weeks and the one-year had last risen during the week ended September 11.

Frank Nothaft, Freddie Mac vice president and chief economist commented that, "Mortgage rates followed Treasury bond yields higher this week amid market uncertainty over the current state of the economy.  Compared with last Thursday, 10-year Treasury yields are up about 0.3 percentage points, and 30-year fixed-rate loans moved up about the same amount.  And while up, interest rates for 30-year FRMs are still more than 0.5 percentage points below this year's peak of 6.63 percent set the week of July 24th.

"The latest housing information for the third quarter continues to show some softness in prices and sales activity.  House prices fell 5.3 percent over the twelve months ending in July 'weaker than the market consensus' according to the Federal Housing Finance Agency's purchase-only house price index.  During August, the median sales price of existing single-family homes (excluding condominiums and co-ops) fell 9.7 percent in August over August 2007, the largest 12-month drop since records began in 1968, according the National Association of Realtors (NAR).  Overall resales dipped by 2.2 percent between July and August, on a seasonally-adjusted basis."

Bankrate reported that its national survey of large lenders showed even higher rates.  The 30-year FRM rose16 basis points to 6.32 percent with an average of 0.43 discount and origination points.

15-year FRMs were up 27 basis points to 6.11 percent and the 5/1 hybrid ARM increased 31 basis points to 6.38 percent.  Jumbo 30-year rates averaged 7.58 percent compared to 7.36 percent a week earlier.