The old mortgage tracking clock has just rolled back to March 2. That was the last time that the interest on a 30-year fixed-rate mortgage was lower than the average contract rate that Freddie Mac reported for last week, the week ending September 28.

The most recent Weekly Primary Mortgage Market Survey recorded a nine point drop last week with the average rate at 6.31 percent with 0.4 fees and points. One year ago the 30-year fixed-rate mortgaged averaged 5.91 percent. The 15-year fixed-rate mortgage averaged 5.98 percent compared to 6.06 the previous week. Fees and points for both long-term fixed rate mortgages declined from 0.5 to 0.4.

The Treasury-indexed 5/1 adjustable rate mortgage (ARM) was at an even 6 percent with 0.5 fees and points. One week ago the rate was 6.08 percent and 0.5 points. During the week of February 23, 2006 the 5/1 was 5.96 percent.

One-year Treasury-indexed ARMs averaged 5.47 percent this week, 7 basis points less than the week before. Fees and points dropped from 0.8 to 0.6.

This week both the 15-year fixed and the one-year ARM were the lowest they had been since March 23, 2006 when they averaged 5.97 and 5.41 percent respectively.

Frank Nothaft, Freddie Mac vice president and chief economist offered this explanation of the declining rates. "This week's economic releases, which showed a slight one-year decline in both new and existing house prices in August, fell short of market expectations and prompted market analysts to reassess how much the housing sector will contribute to economic growth in the coming year. As a result, mortgage rates declined even further this week to match those set six months ago. One bright note in the releases was that the average time new homes stood for sale narrowed from 6.6 months to 6.3 months in August, which should mitigate some of the softening of new home prices over the next few months. In addition, both lower mortgage rates and a moderation in house price growth should lead to increased housing affordability - especially as family incomes are forecasted to continue rising."

However, two of the three rates tracked by the Mortgage Bankers Association (MBA) increased during the week ended September 29. The average contract rate for 30-year fixed-rate mortgages increased from 6.18 percent the previous week to 6.24 percent. Points, including the origination fee, decreased to 1.03 from 1.06.

The 15-year fixed rate mortgage increased five basis points to 5.86 percent with points falling from to 1.0 from 1.12.

The one-year ARM was down to 5.86 percent from 5.90 the week of September 29. Points were unchanged at 0.79.

All rates quoted are for 80 percent loan to value mortgages.

Applications for mortgages increased 11.9 percent on a seasonally adjusted basis from the earlier week and 11.5 percent on an unadjusted basis. The change from the same week a year earlier was 10.9 percent, the first time that measure of activity declined less than 20 percent in many weeks.

Refinancing as a share of all applications continues strong, representing 46.7 percent of all mortgage applications compared to 44.3 percent the previous week. This was the strongest week for refinancing activity since February 2005. Mike Frantantoni, MBA's senior director of single family research and economics credited the continued improvement of the refinancing market on mortgage rates which had declined the previous week to their lowest levels since the beginning of the year.

Adjustable rate mortgages represented 27 percent of application during the week compared to 26.4 percent the week before.