After a single "up" week, long term interest rates have resumed the slow downward pattern that began the week ending July 20.

Freddie Mac's Primary Mortgage Market Survey for the week ended September recorded an average rate of 6.43 percent for the 30-year fixed-rate mortgage. This is 3 basis points lower than the previous week and the lowest level the 30 year has reached since the week ending April 6. Points moved up from 0.4 to 0.5. One year ago the 30-year averaged 5.74 percent.



The 15-year fixed-rate product averaged 6.11 percent, down from 6.16 percent the week ended September 7. Points were unchanged at 0.4. The same week in 2005 the 15-year averaged 5.32 percent.

The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) declined from 6.14 percent to 6.10 percent with points increasing from 0.5 to 0.6. One year ago the 5/1 ARM averaged 5.26 percent.

Finally, the average of the one-year Treasury-indexed ARM was 5.60 percent this week compared to 5.63 percent the week before with points unchanged at 0.7. This is 1.17 points higher than one year ago.

Frank Nothaft, Freddie Mac vice president and chief economist said, "Although 30-year mortgages rates are about three-fourths of a percentage point higher than they were last year, it's good to keep in mind that rates have dropped from the high of 6.80 percent reached just eight weeks ago. And with short-term interest rate increases seemingly on hold, for a while at least, interest rates overall should not experience any big shifts in either direction.

"The risk to our forecast of relatively stable mortgage rates is that inflation will unexpectedly heat up, causing bond markets to raise their expectations that the Fed will intervene by raising short-term rates. In that case, mortgage rates will again start to rise."

The Federal Reserve was scheduled to meet on September 20 and the Conventional Wisdom was that it would continue to hold rates steady as it did at its last meeting.

As so often happens with the two weekly surveys we track, The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending September 15 reported that rates were moving in the opposite direction.

MBA's survey found that the average contract interest rate for 30-year fixed rate mortgages moved up 4 basis points from the previous week to 6.36 percent with points, including the origination fee, increasing from 1.06 to 1.11. The 15-year fixed rate mortgage averaged 6.04 percent compared to 5.98 percent for the week ending September 8. Fees and points edged down from 1.08 to 1.06.

The one-year ARM did lose one basis point, averaging 5.95 percent with points decreasing to 0.77 from 0.82.

All rates are for loans with 80 percent loan to value ratios.

Mortgage activity improved slightly, up 2 percent on a seasonally adjusted basis from the previous week and 12.3 percent on an unadjusted basis. (The previous week had been a short one due to the Labor Day holiday.) Applications continued well off the pace of 2005 - down 22.5 percent last week compared to the same week one year earlier.

Refinancing activity was up sharply, representing 43.7 percent of all applications compared to 40.3 percent the previous week. ARMs represented 17 percent of all applications compared to 25.5 percent the previous week.