Mortgage interest rates as reported by Freddie Mac were only slightly changed if changed at all during the week ended December 27 - the last full survey week of the year.

The Primary Mortgage Market Survey reported an average for the 30-year fixed rate mortgage (FRM) of 6.17 percent with an average 0.5 point. One week earlier the 30-year averaged 6.14 percent with 0.4 point.

The 15-year FRM did not budge from the 5.79 percent average of the previous week although fees and points did creep upward from an average of 0.4 point to 0.5.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were also unchanged from the previous week at 5.90 percent and 0.5 point.

One-year Treasury-indexed ARMS moved up two basis points to 5.53 percent with 0.7 point. The average for fees and points the previous week was 0.6.

"Stronger consumer spending and an increase in the core price deflator in November caused long-term bond yields to inch up over the end of last week and beginning of this week, with mortgage rates following," said Frank Nothaft, Freddie Mac vice president and chief economist. "Offsetting some of the increase, however, was a decline in November's index of leading economic indicators and a weak manufacturing report in Philadelphia for December.
"House prices continued to decline in October, falling nearly 16 percent (annualized), and represented the fifteenth consecutive monthly decline according to the Standard & Poor's/Case-Shiller® 20-city composite index. Seventeen of the twenty metropolitan areas displayed negative growth from October 2006. Falling house prices and tightened credit standards will likely slow consumer spending somewhat over the near term."
The Weekly Mortgage Applications Survey issued by the Mortgage Bankers Association showed a little more movement in the rates it reported with the 30-year FRM dropping five basis points to 6.05 percent with points, including the origination fee, unchanged at 1.05.

The rate for 15-year FRMs also lost five basis points, decreasing from 5.66 to 5.61 percent. Points also decreased from 1.09 to 1.02.

The average contract interest rate for one-year ARMS went down to 6.0 percent from 6.03 percent with points decreasing to 1.0 from 1.01.

2007 rates moved in a very narrow arc throughout the year. The first week of the year saw an average 6.18 for the 30-year FRM and the last week was one basis point lower. The high for the year was 6.74 percent during the week ended June 14.

The 15-year mortgage rate started the year at 5.94 percent and ended at 5.79. The rate hit a high of 6.43 percent, also during the week ended June 14.

Five-year hybrid ARMS averaged 6.02 percent during the week ended January 4, 2007, 12 basis points higher than at year end. The highest rate of the year during the week ended June 14 was 6.37 percent.

One-year ARMs began the year at 5.42 percent; hit a high of 5.84 percent during the week ended August 30, and, of course finished at 5.53 percent.

Perhaps there is something to this economic theory business after all. In January Freddie Mac projected that rates this past year would average 6.3 percent for the 30-year FRM and 5.5 percent for the one-year ARM (they did not speculate on the other two products.) While we haven't done the calculations it appears that they weren't far off the mark.

The MBA survey issued this morning showed a slowing of mortgage applications during the Christmas holiday shortened week. On a seasonally adjusted basis application volume was down 11.6 percent from the previous week; on an unadjusted basis activity fell 47.2 percent. Volume was also down 20 percent from the Christmas week of 2006.

The share of mortgage applications for the purpose of refinancing decreased from 53.0 percent of all applications to 50.9 percent while the market share of adjustable rate mortgages dropped back into single digits - 9.8 percent compared to 10.4 the week before.