Long- and short-term interest rates each moved slightly during the week ended May 22 on the basis of larger economic news according to Freddie Mac's Primary Mortgage Market Survey.

Frank Nothaft, Freddie Mac vice president and chief economist reported that "Interest rates for fixed-rate mortgages fell slightly this week on news of both weaker industrial production in April and consumer sentiment falling in May to its lowest level since June 1980. ARM rates, however, rose slightly on market forecasts that the Federal Reserve (Fed) may not pursue any more rate cuts over the near term. For instance, the federal funds futures market suggests virtually no change in monetary policy over the next few months and the Fed viewed the last rate cut to be a "close call," according to the minutes of its most recent policy Committee meeting.

"Housing woes still plague the economy. Although housing starts unexpectedly rose in April, all of the gains were in multifamily properties. New construction on one-unit homes fell to 692,000 homes (annualized), which was the least since January 1991 and almost 62 percent below the peak set in November 2005. In addition, homebuilder confidence matched an all-time record low in May."



The 30-year fixed-rate mortgage (FRM) averaged 5.98 percent with an average 0.5 point. This was down from last week's average of 6.01 percent with 0.6 point.

The 15-year FRM averaged 5.55 percent, a decrease of 5 basis points from the previous week. Fees and points were unchanged at 0.6.

The Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.61 percent this week, up from last week when it averaged 5.57 percent. Fees and points were, again, unchanged at an average of 0.6.

One-year Treasury-indexed ARMs had an average contract interest rate of 5.24 percent, an increase of 6 basis points from the week ended May 5. Fees and points decreased from 0.7 to 0.6.

The Weekly Mortgage Applications Survey conducted by The Mortgage Bankers Association reported across-the-board rate increases for both short and long term products.

The rate for 30-year FRMs increased to 5.96 percent from 5.90 percent with points, including the origination fee, decreasing to 1.11 from 1.12.

The average contract interest rate for 15-year FRMs increased 7 basis points to 5.49 percent with points inching up from 1.14 to 1.15.

On the short-term side, the rate for one-year ARMs increased to 6.92 percent from 6.71 percent while points increased to 1.42 from 1.35.

Mortgage application volume decreased 4.6 percent on both a seasonally adjusted and unadjusted basis from one week earlier and was down 7.5 percent from the same week in 2007.

Applications to refinance represented 46.1 percent of all mortgage applications compared to 48.2 percent one week earlier while the market share of adjustable-rate mortgages declined to 9.3 percent from 10.0 percent of total applications the week before.