Mortgage rates continued a general downward trend during the week ended November 16 with the long term rate retreating substantially.

According to Freddie Mac and its Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 6.24 percent. This was 9 basis points below the average rate for the week ended November 9 and 14 basis points lower than the rate one year ago.

The 15-year FRM also dropped nine basis points to 5.94 percent with 0.5 point. One year ago this product averaged 5.90 percent.

Declines in adjustable rate mortgages (ARMs) were less pronounced. The five-year Treasury-indexed ARM averaged 6.04 percent compared with 6.08 a week earlier. One year ago that rate was 5.86 percent. The one-year Treasury-indexed ARM averaged 5.53 percent, 2 basis points lower than last week. One year ago that rate was 5.20 percent.

All products carried an average of 0.5 in fees and points which represented no change for the two FRMs but was 0.2 and 0.3 less respectively than the 5/1 and 1-year ARM one week earlier.

According to Frank Nothaft, Freddie Mac vice president and chief economist, "Both long- and short-term mortgage rates fell this week on early signs that the threat of inflation may be waning, The Producer Price Index (PPI) and Consumer Price Index (CPI) for October came in lower than expected and bond yields dropped, pulling mortgage rates lower.

He went on to predict that, "we've probably seen the worst of the housing slump, although it may not have entirely bottomed out yet. On the other hand, lower mortgage rates should help stimulate activity in the housing market."

The Mortgage Bankers Association whose own Weekly Mortgage Applications Survey is often out of sync with Freddie Mac went one for three in with FM in its latest survey week which ended November 17. MBA's survey reported that the 30-year FRM was down to 6.13 percent from 6.15 with points, including the origination fee decreasing to 0.95 from 0.98. This is the lowest rate recorded by MBA for the long term mortgage since January 2006.

However, MBA found that the average contract interest rate for the 15-year FRM was up three basis points to 5.88, although points decreased to 0.96 from 1.0. The one-year ARM crept up to 5.88 percent from 5.87 with points moving to 0.8 from 0.78.

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

Mortgage applications were down 3.7 percent on a seasonally adjusted basis from one week earlier but increased 5.1 percent on an unadjusted basis. Year-over-year, applications were off only 0.1 percent from the same period in 2005.

Refinancing has rebounded from the 30+ market share commonly seen in this survey earlier in the year. During the past week refi applications represented 48.6 percent of all mortgage activity but adjustable rate mortgages are not faring as well. For a number of weeks the market share of this product has been hovering in the mid 20 percent range and this week it was 25.5 percent, unchanged from the previous survey.