Continued tight credit and worries about inflation worked to keep mortgage rates essentially locked into place during the week ended May 1 according to the Primary Mortgage Market Survey conducted by Freddie Mac.

Freddie Mac vice president and chief economist Frank Nothaft said, "This week saw little change in mortgage rates on mixed news of higher inflation and a weaker housing market.

"Additionally, in its most recent policy committee statement on April 30, the Federal Reserve (Fed) indicated it expects inflation to moderate in coming quarters but uncertainty about the outlook for inflation remains high. However, the Fed did note that financial markets remain under considerable stress and tight credit conditions, along with the deepening housing contraction, are likely to weigh on economic growth."

For the week, the 30-year fixed-rate mortgage (FRM) averaged 6.06 percent with 0.5 point compared to the previous week when the rate was 6.03 percent with 0.3 point.



The 15-year FRM was down three basis points to 5.59 percent. Fees and points averaged 0.5 point compared to 0.3 point the week before.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were at an average rate of 5.73 percent, up from 5.68 percent the previous week. Fees and points were unchanged at 0.5 point.

One-year Treasury-indexed ARMs were unchanged at 5.29 percent although average fees and points increased from 0.5 to 0.6.

The Mortgage Bankers Association weekly survey of mortgage application volume clocked decreases in interest rates ranging from four to nine basis points on the various mortgage types from one week earlier.

The 30-year FRM decreased from 6.01 percent on average to 5.91 percent while the 15-year FRM was down to 5.49 percent from 5.53 percent. The one-year ARM had the most substantial change, decreasing from 6.86 percent to 6.77 percent.

Mortgage application volume increased 15.6 percent on a seasonally adjusted basis from the previous week while the volume was down 4.4 percent compared to the same week one year ago.

Refinancing applications were up 19.3 percent week-over-week while applications to purchase homes increased 12.1 percent, seasonally adjusted.

Refinancings made up 47.1% of total application compared to 45.7% the previous week. Adjustable-rate mortgages accounted for 6.8% of all applications, up from 5.9%.

MBA also reported that mortgage originations for commercial and multifamily properties were up 19 percent last year (2007) with lenders closing $507.7 billion in loans.

Increases were seen in originations for most property types and investor groups but were led by loans for office buildings and loans for commercial mortgage-backed securities, collateralized debt obligations, and other asset-backed securities.

Lending for office properties grew by 36 percent between 2006 and 2007. Lending for multifamily, health care, and hotel/motel saw increases, while retail and industrial saw slight declines over the year.

"Even with the credit crunch hitting mid-year, 2007 still set a record for commercial/multifamily mortgage originations," said Jamie Woodwell, MBA's Senior Director of Commercial/Multifamily Research. "The 2007 numbers show both the importance of the commercial mortgage-backed securities (CMBS) market to commercial real estate finance and the depth of other funding sources, such as banks and thrifts, life companies, Fannie Mae, Freddie Mac and others."