Mortgage rates continued to decline by baby steps as reported by Freddie Mac in its Primary Mortgage Market Survey. The 30-year fixed-rate mortgage (FRM) averaged 6.20 percent with 0.5 point during the week ended November 21. The previous week it averaged 6.24 percent with 0.4 point. One year ago the 30-year averaged 6.18 percent.

The 15-year FRM dropped five basis points from the previous week to an average of 5.83 percent. Fees and points increased to 0.5 point from 0.4. One year ago the average interest rate for this product was 5.91 percent. The drop this week brought the 15 year to its lowest average since early last February

The five-year Treasury indexed hybrid adjustable rate mortgage (ARM) dropped to 5.88 percent from 5.96 percent with points increasing from 0.4 to 0.5. One year ago the 5-year ARM averaged 5.99 percent.

One-year ARMs lost eight basis points from the average of 5.50 one week earlier. Points and fees increased to 0.6 point from 0.5. This was the low for the one-year ARM since it averaged 5.4 percent during the week ended March 22. One year ago the average was 5.49 percent.

"Both the producer price index and the consumer price index remained contained in October while industrial production fell," said Frank Nothaft, Freddie Mac vice president and chief economist. "This allowed interest rates for the 30-year FRM to decline to the lowest levels since early May 2007 and the 15-year FRM to fall to a level not experienced since early last year.
"The housing market remains weak, continuing to be a drag on the economy. For instance, single-family housing starts fell 6.4 percent in October to 917,000 units (annualized), the slowest pace since September 1991, nearly 25 percent below that of October 2006. Additionally, homebuilder confidence in November remained at the lowest level on record."

The Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association for the week ended November 23 showed a strange pattern in interest rate changes.

The average contract interest rate for 30-year FRMs decreased to 6.09 percent with 1.07 points including the origination fee from 6.18 percent with 1.01 points a week earlier. The 15-year FRM dropped two basis points to 5.69 percent with points increasing to 1.13 from 1.12. However, the one-year ARM showed an increase in the average rate of a whopping 26 basis points, averaging 6.24 percent for the week with points increasing to 0.96 from 0.89.

Mortgage application volume decreased 4.3 percent on a seasonally and holiday adjusted basis from the previous week and 25.5 percent on an unadjusted basis which reflected the Thanksgiving holiday shortened week. Application volume, however, was 24.6 percent higher than the same week one year earlier.

Refinancing as a share of overall mortgage activity decreased to 45.8 percent from 50.3 percent the previous week and the market share of adjustable rate mortgages dropped to 14.6 percent of total applications from 15.8 percent the week before.