Mortgage interest rates slipped for the second week in a row last week, with some rates reaching 2007 lows.

According to Freddie Mac's Primary Mortgage Market Survey the 30-year fixed-rate mortgage (FRM) averaged 6.18 for the week with an average of 0.4 point. The previous week it averaged 6.22 with 0.4 point. The rate is identical to the year's low that occurred the week January 4.

The 15-year FRM established a new low for the year at 5.92 percent, down five basis points from the previous week and two basis points lower than the first week of the year. Points were unchanged at 0.5.

The one-year Treasury-indexed ARM was unchanged from the previous week at 5.49 percent. Average fees and points did decrease to 0.6 from 0.7.

Frank Nothaft, Freddie Mac vice president and chief economist said, "Mortgage rates drifted lower this week largely on the basis of new economic information suggesting a slower economy and lower inflation. Real GDP growth for the last quarter was revised downward to a 2.2 percent annualized rate, compared to the 3.5 percent initially estimated, while the accompanying price measure showed that core inflation was tamer than first reported, at a revised 1.9 percent annualized rate."

"Home sales painted a mixed picture of January's activity. Continued weakness in the housing market was evidenced in January's new home sales, which fell by 17 percent from the previous month. Meanwhile, existing home sales rose unexpectedly in the same time period. While the overall trend is unclear, the housing market is likely to continue on its rocky path during the first half of 2007."

The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 2 showed a substantial drop in all contract rates and a strong up tick in mortgage activity.

The interest rate on 30-year FRMs decreased to 6.04 percent from 6.16 percent although points, including the origination fee were up from 1.05 to 1.27. This was the lowest interest rate since December 8, 2006.

The 15-year FRM declined to 5.73 from 5.84 the previous week with points increasing from 1.19 to 1.24. This was the lowest level for this product since December 1.

The biggest drop was in the one-year ARM which lost 13 basis points to average 5.79 percent with points averaging 0.8 compared to 0.77 the previous week.

Mortgage applications increased 7.3 percent on a seasonally adjusted basis from the week ended February 23. On an unadjusted basis activity was up 19.9 percent and was 15.6 percent higher than the same week in 2006.

Refinancing as a share of all mortgage activity increased to 46.1 percent of total applications, probably reflecting the drop in rates. The refinance share the previous week was 43.2 percent. Adjustable rate mortgages also recovered a bit to represent 21.4 percent of mortgage applications compared to 21.1 percent the week before.