Mortgage interest rates broke through the gridlock of the last few weeks and, with the exception of one-year adjustable rates, moved lower.

According to Freddie Mac, the results of its Primary Mortgage Market Survey indicated that the average contract rate for the 30-year fixed-rate mortgage (FRM) was 6.47 percent with 0.7 point for the week ended August 21. One week earlier the 30-year FRM averaged 6.52 percent with 0.7 point.

The 15-year FRM averaged 6.0 percent compared to 6.07 percent a week earlier. Fees and points were unchanged at 0.7.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.99 percent with 0.6 point, down from last week when it averaged 6.02 percent with 0.6 point.



The one-year Treasury-indexed ARM was the only exception to the downward trend. The average rate was 5.29 percent and 0.5 point compared to 5.18 percent with 0.5 point during the week ended August 14.

"Even with the current historically affordable mortgage rates, news continues to show signs of weakening in the housing sector," said Frank Nothaft, Freddie Mac vice president and chief economist. "For example, housing starts fell to 0.965 million units (annualized) in July, the slowest pace since March 1991. As a result, homebuilder confidence remained at an all-time record low in August since the series began in January 1985.

The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ended August 22 showed the same pattern of declining long-term and rising short-term rates.

The average contract interest rate for a 30-year FRM decreased to 6.44 from 6.47 percent with points decreasing from 1.10 to 1.03 including the origination fee.

Fifteen-year fixed-rate mortgages decreased to 5.94 percent from 5.99 percent, with points decreasing to 1.13 from 1.18. The only short term-rate tracked by MBA, the one-year ARM, increased to 7.15 percent from 7.07 percent, with points decreasing to 0.36 from 0.42.

Mortgage activity as measured by the volume of loan applications increased by a marginal 0.5 percent on a seasonally adjusted basis from a week earlier and decreased by 0.9 percent unadjusted. Volume was down 31.2 percent compared to the same week in 2007.

Loan applications intended for refinancing represented 35.2 percent of the total, up from 34.8 percent a week earlier but the market share of applications for adjustable rate mortgages fell to 7.9 percent from 8.0 percent.