Mortgage interest rates made substantial moves during the week ended March 6 and 7, but according to surveys conducted by Freddie Mac and by the Mortgage Bankers Association (MBA) they made the moves in opposite directions. There are frequently differences in the trends revealed in the two surveys which have different sized data bases (MBA is larger) and collect information from different if overlapping participants (Freddie Mac's survey is limited to conforming mortgages), but seldom is the disparity as stark as it was this week.

Freddie's Primary Mortgage Market Survey reported that the 30-year fixed-rate mortgage (FRM) dropped from 6.24 during the week ended February 29 to 6.03 percent last week. Fees and points were unchanged at an average of 0.5. This was the lowest rate for the 30-year so far in 2008.



The 15 year FRM was 25 basis points lower than the previous week, averaging 5.47 percent. Fees and points for this product were also unchanged at 0.5.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 5.34 percent with 0.5 point down from the previous week when it averaged 5.43 percent with 0.4 point.

One-year Treasury-indexed ARMs dropped below 5 percent again, averaging 4.94 percent with 0.5 point compared with an average a week earlier of 5.11 percent with 0.7 point. This was also the lowest rate for the one-year ARM thus far this year.

The MBA Weekly Mortgage Applications Survey painted a very different picture, reporting sharply higher interest rates across the board. The resulting rates are in striking variance from those reported by Freddie Mac. In particular there is a 1.78 point spread between reported averages for the one-year ARM.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.37 percent from 5.98 percent, with points, including the origination fee, decreasing to 1.05 from 1.15.

The rate for 15-year fixed-rate mortgages increased to 5.72 percent from 5.26 percent, with points decreasing to 1.06 from 1.08.

One-year ARMs increased nearly a point, soaring to 6.72 percent from 5.83 percent, with points increasing to 1.27 from 0.85. MBA did not offer any explanation for this increase.

Frank Nothaft, Freddie Mac vice president and chief economist commented on his corporation's findings: "Weak economic reports that indicated declines in the job market, slowing in manufacturing and low consumer confidence drove bond yields lower this week and mortgage rates followed.

"Meanwhile, the housing market continues to take a toll on the rest of the economy. Residential fixed investment shaved 1.25 percentage points off economic growth in the fourth quarter of 2007. More recently, the median sales price of new homes fell 15.1 percent in January, representing the largest annual drop on record. Residential construction fell 19.7 percent over the twelve-months ending January 2008, the largest decline since March 2007."

The MBA survey also showed a drop in mortgage applications. The volume was down 1.9 percent on a seasonally adjusted basis and 1.4 percent on an unadjusted basis from one week earlier, and down 3.4 percent from the same week one year ago - the first time that a year-over-year decline has happened in many months.

Refinancing applications represented 50.6 percent of all applications compared to 52.4 percent the week before and the market share of ARMs decreased to 15.5 percent from 17.3 percent the previous week.