Mortgage rates continued to ebb and flow within a narrow range last week; most rates are little changed from where they were in late July 2006.

Freddie Mac's Primary Mortgage Market Survey for the week ended July 26 reported that the 30-year fixed-rate mortgage (FRM) averaged 6.69 percent with an average 0.4 point. This was a slight change from the previous week when the 30-year averaged 6.74 percent also with 0.4 point. It was also only a small change from the average of 6.72 percent exactly one year ago.

The 15 year FRM averaged 6.37 percent compared to 6.38 percent the previous week. Fees and points were unchanged at 0.4. One year ago the 15-year rate was 6.34 percent.

One-year Treasury-indexed ARMs carried an average contract interest rate of 5.69 percent with 0.5 point, down from last week's 5.72 percent also with 0.5 point. One year ago the one-year ARM averaged 5.78 percent.

Frank Nothaft, Freddie Mac vice president and chief economist commented that "Mortgage rates eased this week on market concerns that a further weakening of housing demand this spring will delay any recovery in the sector. For example, building permits fell last month to the slowest pace in a decade, and more recent data on June sales of existing homes showed a fourth consecutive monthly decline.

"Several factors contributed to the softening in housing markets this spring. In addition to the tightening of lending standards earlier this year, especially on subprime loans, the 40 basis point jump in rates on 30-year fixed-rate mortgages in June may have deterred potential buyers. For the year-to-date, sales of single-family homes were down about 9 percent from the first half of 2007."

The Mortgage Bankers Association (MBA) also noted a decline in most interest rates according to results from their Weekly Mortgage Applications Survey for the week ended July 27.

The average contract interest rate for 30-year FRMs dropped nine basis points from the previous week to 6.50 percent with points, including the origination fee, increasing from 1.55 to 1.66 for 80 percent loan-to-value loans.

15-year FRMs carried an average contract interest rate of 6.20 percent compared to 6.24 percent the previous week with points declining to 1.30 from 1.43. The average rate for the one-year ARM, however, increased from 5.62 percent to 5.73 percent with points decreasing from 1.13 to 1.12.

Mortgage applications decreased 0.3 percent on a seasonally adjusted basis and 0.4 percent unadjusted compared to the previous week but applications were up 14.2 percent from the pace set during the same week in 2006.

Refinancing as a share of all mortgage application activity increased from 38.5 percent to 39.4 percent while the market share of adjustable rate mortgages increased from 21.0 percent of the total to 22.3 percent.