Mortgage interest rates declined slightly during the week, easing further off of the sudden increases in rates the last week of the year.  Freddie Mac reported that the average rate for a 30-year fixed-rate (FRM) mortgage during the week ended January 14 was 5.06 percent with 0.7 point compared to 5.09 percent and 0.7 point a week earlier. During the week ended December 31 the rate had jumped 9 basis points to 5.24 percent.

This week the 15-year FRM dropped five basis points to 4.45 percent with 0.6 point.  During the week ended January 7, the average rate was 4.50 percent with 0.7 point.  The 15-year had also experienced a surge between Christmas and New Year, rising 9 basis points to 4.54 percent.

The weekly Primary Mortgage Market Survey reported that 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 4.32 percent compared to 4.44 percent.  Fees and points also declined from 0.6 to 0.5 point.

The 1-year Treasury-indexed ARM was the only Freddie Mac mortgage to show an increase during the week, moving from 4.31 percent to 4.39 percent.  Fees and points declined from 0.6 to 0.5 point.

Frank Nothaft, Freddie Mac vice president and chief economist said, "Interest rates for fixed-rate mortgages eased a little further this week, while ARM rates were mixed.  With fixed mortgages rates staying near a record low, many homeowners are taking the opportunity to refinance.  For instance, over the past three-and-a-half months, on average more than 75 percent of conventional mortgage applications were for refinance transactions, according (to) the Mortgage Bankers Association.

"The Federal Reserve recently reported positive news in both the housing market and the overall state of the economy in its January 13^th regional economic report, which spanned the last few months of 2009.  Economic activity improved in 10 of its 12 districts.  Home sales, especially for lower-priced homes, increased due in part to the homebuyer tax credit and house prices appeared to have changed little since its last report."

Fannie Mae's yields for the week ended January 8 were mixed relative to the previous week.  The conventional 30-year FRM was up from 4.89 percent to 4.95 percent while the 15-year FRM declined from 4.21 percent to 4.18 percent.  Government guaranteed FHA and VA mortgages were also up, rising from 5.67 percent to 5.74 percent. The 1-year ARM averaged 2.70 percent compared to 2.74 percent the previous week.  All Fannie Mae yields are reported net of servicing fees.