Long term mortgage rates during the previous week did not respond at all to the drop in the Federal Funds Rate announced by the Federal Reserve a little over a week earlier according to Freddie Mac's Primary Mortgage Market Survey (PMMS). Shorter term rates did decline several basis points.

The 30-year fixed-rate mortgage (FRM) averaged 6.42 percent with 0.5 point for the week compared to the previous week when the average was 6.34 percent also with 0.5 point. Last year at the same time the 30-year FRM averaged 6.31 percent.

The 15-year FRM was up 9 basis points from 5.98 to 6.09 percent with 0.5 point from the week ended September 20. The rate one year ago was also 5.98 percent.

The PMMS pegged the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) at 6.15 with an average 0.5 point, down from last week when it averaged 6.21 percent with 0.5 point. A year ago, the 5-year ARM averaged 6.00 percent.

One-year Treasury-indexed ARMs lost 5 basis points from the previous week when the average was 5.65 percent. Points last week averaged 0.6 point, unchanged from the previous week. At this point in 2006 the 1-year ARM averaged 5.47 percent.

"Consistent with the direction of 10-year Treasury securities, average rates on 30-year fixed-rate mortgages drifted up in the past week to levels close to those at the beginning of the month," said Frank Nothaft, Freddie Mac vice president and chief economist. "Also tracking short-term Treasury notes, average rates on 1-year adjustable-rate mortgages (ARMs) dropped by 5-hundredth of a percent. Though it is the fourth consecutive week rates on ARMs have declined, the share of mortgage applications for ARMs has been trending down, and last week reached its lowest level since March 2003, according to the Mortgage Bankers Association." (Ed. Note: Once again, as last week, we are dealing with a time discrepancy because of the lag between MBA closing down its data and actually releasing the results of its survey. As will be seen below, in its most recent survey MBA found ARM applications to have increased.)

"Additionally, existing home sales continued to decline in August to the slowest pace in 5 years to a seasonally adjusted 5.5 million units. Sales of single-family homes slowed in every census region, with the highest impact felt in the Western region."

The Mortgage Bankers Association (MBA) just released its Weekly Mortgage Applications Survey for the week ending September 28, 2007. Mortgage applications activity was down 2.7 percent when seasonally adjusted from one week earlier and 2.9 percent when unadjusted. The Market Composite Index which measures this activity was up a slight 0.4 percent compared with the same week one year earlier.

In the MBA survey it was longer term rates that decreased while the only short-term rate the survey tracks was up.

The average contract interest rate for 30-year fixed-rate mortgages decreased 6 basis point to 6.32 percent with points including the origination fee decreasing to 1.08 from 1.15 for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.95 with 1.07 points from 6.06 percent and 1.12 points.

The interest rate for one-year ARMs was up to 6.21 percent from 6.09 percent, while points decreased to 0.89 from 0.93.

Refinancing as a share of all mortgage activity dropped slightly to 46 percent from 46.4 percent the previous week while the market share of adjustable rate mortgages actually bumped up a bit to 13.8 percent of all applications from 12.2 percent the week of September 20.