Mortgage rates drifted down for the third consecutive week although they remain well above the record lows established this spring.

According to the Primary Mortgage Market Survey conducted by Freddie Mac for the week ended July 16, interest rates for the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with 0.7 point compared to the previous week's average of 5.20 percent with 0.7 point.

The 15-year FRM dropped six basis points to an average of 4.63 percent.  Fees and points were unchanged at 0.7 point.

Five-year Treasury-indexed hybrid adjustable-rate mortgages were the only product to eke out a slight increase, moving from 4.82 percent with 0.6 point to 4.83 percent with 0.7 point for the week.

One-year Treasury-indexed ARMS averaged 4.75 percent with 0.5 point, down substantially from the week ended July 11 when the rate was 4.82 percent with 0.6 point.

Frank Nothaft, Freddie Mac vice president and chief economist stated, "Average fixed-rate mortgage rates were lower than last week and were down 0.4 percent to 0.5 percent from the levels of early June. For a 30-year fixed-rate mortgage, the rate reduction over the past five weeks translates into a monthly payment saving of $56 on a $200,000 loan.

"The latest economic reports were influenced by recent energy-cost movements. Although higher gasoline prices fueled a 0.7 percent monthly jump in the consumer price index for June, the index was down 1.4 percent from June 2008 and represented the largest 12-month drop since January 1950. In addition, retail sales rose 0.6 percent in June bolstered by automobile sale incentives and higher gasoline prices; the average price for regular gasoline has since fallen 6.1 percent from its recent high set over the week ending June 22, according to the Energy Information Administration. And finally, industrial production fell only 0.4 percent in June, the slowest decline in eight months."

On Monday Fannie Mae released information on its yields for the week ended July 10.

The conventional 30-year FRM dropped from an average of 4.93 percent during the week ended July 3 to 4.79 percent.  The conventional 15-year FRM decreased to 4.22 percent from 4.35 percent.

Government guaranteed 30-year FHA and VA mortgages which had been in 6 percent territory a few weeks ago now average 5.51 percent, down from 5.69 a week earlier.
 
The largest drop for Fannie Mae yields was for the one-year ARM which averaged 2.99 last week compared to 3.27 the week before.

Fannie Mae's yields are reported net of all servicing fees.