Most interest rates were down again during the week ended August 17 and 18, but the changes were not nearly as aggressive as immediately after the Federal Reserve Board's decision to pause in its long term pattern of quarter-point rate increases.

Freddie Mac's Weekly Primary Mortgage Market Survey for the week ended August 17 reported that average rate for the 30-year fixed-rate mortgage was down 3 basis points from the previous week to 6.52 percent with fees and points decreasing from 0.4 to 0.3. The 15-year fixed rate mortgage was unchanged at 6.20 percent although fees and points for that product also were down to 0.3 from 0.4. The 5/1-year hybrid adjustable rate mortgage moved downward from 6.21 percent to 6.18 percent with fees and points unchanged at 0.4. The largest change was in the traditional 1-year ARM which went from 5.69 percent to 5.65 percent with a whopping 0.3 drop in fees and points to 0.5. In most cases these rates are about the same as were reported in April of this year.



This was the fourth week in a row that rates have dropped and the long term fixed rate products are down at least 20 basis points over that period.

Frank Nothaft, Freddie Mac vice president and chief economist commented "This week's news that July housing starts fell 2.5 percent added conviction to Fed Fund futures traders who are currently pricing contracts to suggest the chances of another rate increase from the central bank this year are about fifty-fifty."
"As a result, 30-year fixed-rate mortgages are down for the fourth straight week and are the lowest they've been since mid-April. Meanwhile, ARM rates have gone down less. All of which could help persuade homeowners with ARMs on the verge of resetting to make the decision to lock into a fixed-rate mortgage now rather than take a chance of a higher rate on the adjustment date."

The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ended August 18 also noted across the board rate decreases.

The 30-year fixed-rate mortgage product took a substantial drop from 6.54 percent to 6.38 percent with points, including the origination fee, remaining unchanged at .98 and the 15-year fixed-rate loan declined 11 basis points to 6.04 percent with points increasing from 1.09 to 1.12. The 1-year ARM pulled back to 5.91 percent from 5.97 percent although fees and points were up slightly to 0.82 from 0.80.

All interest rate quotes are for 80 percent loan to value originations.

Mortgage application volume was up a tiny 0.1 percent on a seasonally adjusted and 1.2 percent unadjusted from a week earlier and continues to run well behind the pace a year ago. Last week's applications were down 25.1 percent from the same week in 2005.

The refinance share of mortgage activity increased to 40.6 percent of total applications from 39.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 26.4 percent of total applications from 27.2 percent the previous week. The ARM share is currently at its lowest level since February 2004.