As the end of the year neared its end and with most people distracted by holiday and family events, mortgage activity was listless and rates were mixed for the week ended December 22 (Freddie Mac) and December 23 (Mortgage Bankers Association.)

Happily, for those still hoping to buy or refinance a house in early 2006, rates, while trending upward, are doing so very slowly and during this most recent week most rates were down a bit.

According to Freddie Mac's Weekly Primary Mortgage Market Survey, the average rate for a 30-year fixed rate mortgage during the week was 6.26 percent with 0.6 in fees and points. This rate was four basis points lower than that reported for the week ended December 15 although fees and points were up from 0.5.

The 15-year fixed rate mortgage also declined from 5.85 percent to 5.79 percent with fees and points rising from 0.5 to 0.6.

Adjustable rate mortgages, however, continued to close the gap with fixed rate products; only slightly more than a point now separates the 30-year from the 1-year ARM. The 5/1-year ARM was up five basis points to 5.82 percent with fees and points taking a big jump from 0.5 to 0.7. The 1-year ARM increased seven basis points to 5.22 percent. Fees and points were at 0.7 for this mortgage type as well, up from 0.6 the previous week.

The Mortgage Bankers Association likewise reported that 30 year fixed-rate mortgages were down, even if ever so slightly, for the week. The rate was 6.21 percent compared to 6.22 percent the previous week with points (including the origination fee) creeping down a tiny 0.01 to 1.18. The 15-year fixed mortgage was unchanged at 5.75 percent with points at 1.20 compared with 1.22 for the previous week.

The biggest change in MBA's survey, which includes only 80 percent loan-to-value mortgages, was the one-year ARM which decreased five basis points to 5.36 percent with points increasing from 0.95 to 0.98. Notably, the 1-year ARM, even with the reported drop, is only 85 basis points below MBA's reported 30 year fixed. Is it safe to assume that borrowers taking on the risk of a 1-year ARM at this point are stretching to the limit to qualify for the loan?

As stated above, mortgage activity was down due to the holidays. On an unadjusted basis applications were down 17.0 percent from the previous week. On an adjusted basis (with an additional factor thrown in to compensate for the holiday) the volume was down 6.8 percent from a week earlier. Applications were up 3.1 percent compared with the same week one year earlier.

Refinancing as a share of overall mortgage activity decreased to 40.2 percent from 41.7 percent the previous week and the adjustable-rate mortgage share also decreased to 32.5 percent of total applications from 32.6 percent the previous week.