Mortgage rates continued to move within a tight range during the week ended May 15 according to results from Freddie Mac's Primary Mortgage Market Survey.

The 30-year fixed-rate mortgage (FRM) averaged 6.01 percent, a decline of 4 basis points from the previous week, although there was a spike in average fees and points from 0.3 to 0.6 point. During the last four weeks the 30-year has moved back and forth in a range between 6.01 to 6.06 percent.

The 15-year FRM was unchanged from the week ending May 8 at 5.60 percent although fees and points again took a bit of a jump upward from 0.3 to 0.5 point. During the last four weeks the 15-year FRM has moved in a range of 5.59 to 5.62 percent.

Adjustable rate mortgages (ARMs) were a bit more volatile. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.57 percent with 0.6 point, down from the previous week when they averaged 5.67 percent with 0.5 point.

One-year Treasury-indexed ARMs dropped 11 basis points to 5.18 percent. Fees and points averaged 0.7 point compared to 0.6 the week before. The drop in rates came on the heels of three straight weeks when the one-year was glued to 5.29 percent.

"Recent remarks by Federal Reserve (Fed) officials, which partly bolstered optimism that financial markets will recover later this year, helped mortgage rates ease up a little this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Fed Chairman Bernanke indicated in a speech on May 13th that the Fed stands ready to continue to add liquidity to the markets. On the same day, San Francisco Fed bank president Janet Yellen added that she anticipates inflation will slow as commodity prices level off in the second half of the year.

"Despite the bleak housing market, there was positive news on the overall state of the economy. Retail sales (excluding automobiles) rose 0.5 percent in April, over twice that of market forecasts, and there was a significant upward revision in March's figures as well. Also, the consumer price index for April rose less than expected, allaying some market concerns of inflation taking hold."

According to the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending May 16, 2008 the average contract interest rate of 30-year FRMs increased from 5.82 percent to 5.9 percent with points, including the origination fee, decreasing to 1.12 from 1.23.

The average contract interest rate for 15-year FRMs increased 4 basis points to 5.42 percent with points increasing from 1.09 to 1.14.

One-year ARMs made the biggest move, increasing to 6.71 percent from 6.60 percent with points increasing to 1.35 from 1.31.

Mortgage application volume was down 7.8 percent on a seasonally adjusted basis. MBA did not report year-over-year figures.

Applications for refinancing decreased to 48.2 percent of all applications from 48.7 percent the previous week. Adjustable rate mortgages increased their share of applications to 10.0 percent from 8.3 percent the previous week.