Mortgage rates reversed a six week downward trend, increasing slightly during the week ended September 7 according to the Weekly Primary Mortgage Market Survey released by Freddie Mac.

Both types of fixed-rate mortgages were up slightly. The 30-year fixed increased from 6.44 percent during the week ended August 31 to 6.47 percent and the 15-year fixed-rate product was up two basis points to 6.16 percent. Fees and points for both types of mortgages were 0.4.

Adjustable rate mortgages also increased. The 5/1 year Treasury-indexed hybrid ARM was 6.14 compared to 6.11 the previous week and the 1-year Treasury-indexed ARM increased to 5.63 percent from 5.59 percent. Fees and points were 0.5 and 0.7 respectively.

Fees and points for all four products were unchanged from August 31 figures.

Frank Nothaft, Freddie Mac vice president and chief economist said “We expect that mortgage rates will continue to fluctuate as new economic data are released, but still remain in the 6-1/2 percent to 7 percent range for the rest of the year. He pointed out that, as rates edge upward, they are being partially offset by a slowdown in home price appreciation.

"Consequently, “ he said, “higher rates have resulted in houses sitting on the market for longer periods of time, changing the real estate sector into more of a buyer's market from the seller's market of the last few years. This is a plus, as it allows potential homebuyers more time to look around and decide what they really want and what they can afford."

Figures from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended September 8 echoed Freddie Mac’s findings although the changes were smaller across the board.

30-year fixed-rate mortgages carried an average rate of 6.32 percent, only one basis point higher than the previous week. Points, including the origination fee decreased from 1.10 to 1.07.

The average contract interest rate for the 15-year fixed-rate mortgage was also up one basis point to 5.98 percent and points dropped from 1.14 to 1.08.

The 1-year ARM showed more movement with the average rate increasing from 5.91 percent to 5.96 percent. Points decreased from 0.83 to 0.82. MBA noted that the 36 basis point spread between the 30-year fixed rate and the 1-year ARM rate is the narrowest it has been since January 2001.

All rates are for 80 percent loan to value contracts.

This was a holiday foreshortened week and mortgage application volume was up 3.2 percent on a seasonally adjusted basis from one week year earlier but down 8.3 percent when unadjusted. As has been consistent for some time, the application volume was off by double digits - 22.8 percent – from the same week in 2006.

Refinancing decreased to a 40.3 percent share of all mortgage applications, down from 41.0 percent the previous week. Adjustable rate mortgage applications represented 25.5 of all activity, down from 26.2 percent.