Mortgage interest rates for the week ended August 14 as reported from data collected by Freddie Mac from its Primary Mortgage Market Survey drifted in a very narrow range as they have done for most of 2008.

In the case of the 30-year fixed-rate mortgage (FRM) the rates are not even drifting; they appear mired in the same space they have occupied since the week ended July 31. For the third week in a row the 30-year rate was unchanged at 6.52 percent with 0.7 point.

The 15-year FRM was a little more fluid, decreasing an average of 3 basis points from one week earlier. Fees and points remained at 0.7 for both weeks.

The average for the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also ratcheted down 3 basis points to 6.02 percent with 0.6 point. Fees and points also averaged 0.6 point during the week ended August 7.



One-year Treasury-indexed ARMs carried an average initial contract interest rate of 5.18 percent with 0.5 point compared to the previous week when that product averaged 5.22 percent with 0.6 point.

"Mortgage rates held relatively steady for the second week in a row amid offsetting economic data releases," said Frank Nothaft, Freddie Mac vice president and chief economist. "For instance, consumer credit grew by $14 billion in June, more than twice the market consensus, but retail sales were weaker in July.

"News was mixed for the housing market as well. Pending existing home sales unexpectedly rose in June, signaling a possible increase in home sales in July and August, according to the National Association of Realtors. Offsetting that information was the news that commercial banks tightened lending standards even more for prime, nontraditional and subprime mortgages in July according to the Federal Reserve, an action that may dampen further home sales activity going forward."

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending August 15 on Wednesday.

According to the MBA survey, the average contract interest rate for 30-year FRMs decreased to 6.47 percent from 6.57 percent with points, including the origination fee, decreasing from 1.14 to 1.10.

The 15-year FRM carried an average interest rate of 5.99 percent with 1.18 points compared to 6.17 percent with 1.06 points a week earlier.

One-year ARMs had an average contract interest rate of 7.07 percent during the week with 0.42 point. A week earlier the rate had averaged 7.15 percent with 0.38 point.

Loan activity as measured by the volume of mortgage applications was down 1.5 percent on a seasonally adjusted basis from the previous week and 2.6 percent unadjusted. Volume was off 34.2 percent compared with the same week in 2007.

Refinancing as a share of all mortgage activity decreased to 34.8 percent from 35.2 percent a week earlier. Applications for adjustable rate mortgages represented only 8.0 percent of the mortgage market compared to 7.3 percent the previous week. The diminishing popularity of adjustable rate mortgages is understandable when one looks at the difference between ARM and fixed-term mortgage interest rates.