The average mortgage rates reported below result from surveys that concluded two or three days before the federal takeover tsunami hit the market.  A decline in rates is one frequently stated hope from the conservatorship of the two GSEs and some sources already reported that rates on the 30-year fixed rate mortgage (FRM) almost immediately dropped - one report said from 6.55 percent to 6.2 percent. 

In the case of the Mortgage Bankers Association there is always a significant time lag between the end of data collection for its Weekly Mortgage Applications report and the release of results and we delay our own weekly summary because that report also contains important information on mortgage activity and the distribution of applications among purchases and refinances. However, due to circumstances over the last four days, we will report on Freddie Mac's Primary Mortgage Market Survey for this week as soon as it is released on Thursday.  

Freddie Mac reported that mortgage rates for the week ended September 4 were generally lower than the previous week. 

The 30-year FRM averaged 6.35 percent with 0.7 points compared to 6.40 percent with 0.6 point a week earlier.

The 15-year FRM carried an average rate of 5.90 percent down from 5.93 the previous week.  Fees and points were unchanged at 0.6 point.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) were at 5.97 percent with 0.6 point.  During the week ended August 28 the hybrid rate was 6.03 percent, also with 0.6 point.  The one-year ARM dropped from 5.33 percent to 5.15 percent with 0.7 point.

"Mortgage rates eased a bit over the holiday-shortened week following release of economic data that suggest consumer spending may slow," said Frank Nothaft, Freddie Mac vice president and chief economist. "The economy grew at an upwardly revised 3.3 percent pace in the second quarter, boosted by the smallest trade deficit in eight years, and residential fixed investment slowed growth by 0.6 percent, the least amount since the same period a year ago.

"However, personal income fell 0.7 percent in July, the first decline since August 2005 and will likely slow consumer spending in the third quarter."

The MBA survey also revealed across-the-board rate declines.  The 30-year FRM decreased from 6.39 percent to 6.06 percent with points, including the origination fee, increasing slightly to 1.02 from 1.00 while the other fixed rate mortgage, the 15-year, declined an average of 23 basis points to 5.73 percent with points decreasing to 0.98 from 1.03.  The one-year ARM averaged 7.0 percent with 0.30 point, down from 7.11 percent with 0.35 point.

Mortgage volume as measured by the number of applications increased 9.5 percent on a seasonally adjusted basis which included an adjustment to account for the Labor Day-shortened week.  On an unadjusted basis volume was down 13.6 percent.  Applications dropped 24.4 percent compared with the same Labor Day week in 2007.

Refinancing as a share of all mortgage applications increased to 36.3 percent from 34.0 percent a week earlier while the market share of ARMs continued to decline, representing only 6.4 percent of all applications compared to 6.6 percent a week earlier.