Mortgage rates continued to trend downward during the week ended November 30 according to Freddie Mac's Primary Mortgage Market Survey.

The 30-year fixed-rate mortgage (FRM) reached its third lowest level of the year at 6.14 percent with an average of 0.4 in fees and points. With 2006 drawing to an end, only two weeks, those ending January 19 and January 26, recorded lower rates at 6.10 and 6.12 respectively. Last week's level was 4 basis points below that for the week ended November 22. With the exception of a single small one-week up tick in November, rates have steadily declined since the week ended October 26.

The 15-year FRM averaged 5.87 percent with 0.4 points, down from the previous week when it averaged 5.91 percent with 0.5 points. This is the lowest rate for the 15-year since February 2 when it averaged 5.81 percent.

The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) had an average rate of 5.95 percent with one-half point, down from the week of November 22 when it averaged 5.99 percent with 0.6 point. The last time this product saw anything near these levels was the week ending March 16 when it averaged 5.93 percent.

One-year Treasury-indexed ARMs averaged 5.46 percent with 0.7 point; one week earlier it was 5.49 percent with 0.6 points.

Frank Nothaft, Freddie Mac vice president and chief economist stated that "Mortgage rates drifted lower this week, bringing long-term rates to levels below those of this time last year. Mortgage applications for home purchase in November have remained healthy, due largely because of the drop in mortgage rates and a softening in home prices in some areas."

The Mortgage Bankers Association in its Weekly Mortgage Applications Survey for the week ending December 1 was in rare unanimity with Freddie Mac in finding interest rates retreating in all categories.

The survey results show that the average contract interest rate for 30-year fixed-rate mortgages decreased to 5.98 from 6.13 percent, with points, including the origination fee, decreasing to 0.91 from 0.97. This is the lowest level reported by MBA for the 30-year FRM since October 2005.

The 15-year fixed-rate mortgage decreased to 5.66 percent from 5.86 percent, although points increased to 1.01 from 0.87. The 15 year rate is at its lowest level since January 2006.

One-year ARMs decreased to 5.79 percent from 5.87, with points decreasing to 0.77 from 0.81; the lowest level since March 2006.

The Market Composite Index, a measure of loan application volume, increased 8.1 percent on a seasonally adjusted basis from numbers one week earlier and 52 percent on an unadjusted basis (the previous week was shortened by the Thanksgiving holiday.) Applications were up 1.9 percent from the same week in 2005.

Refinancing as a share of all mortgage activity increased to 50.1 percent from 46.9 percent the previous week. This is the highest market share that refinancing has enjoyed since April 2004; not surprising as homeowners may view the recent drop in rates as their last chance to bail out of exotic and adjustable rate loans. The ARM share of mortgage activity continued to decline and last week represented 23.9 percent of all applications compared to 24.5 percent the previous week. This is the lowest market share for ARMs since October 2003.