Concern over the slowing housing market may be impacting mortgage rates according to Frank Nothaft, Freddie Mac vice president and chief economist, referring to the results of the corporation's Primary Mortgage Market Survey for last week. That survey indicated a general downward drift in rates.

"Mortgage rates eased a little more this week," Nothaft said, "as market participants were concerned over how much drag the slowing housing market may have on economic growth. For instance, last week's release of housing starts for January showed the weakest reading since August, 1997 due to the abundance of homes already on the market to purchase."

"Next week's releases of new and existing home sales should offer a more complete gauge of the strength of the housing industry. In addition, the second estimate of economic growth in the fourth quarter of 2006 will be released next week and should further provide insight into what extent the housing market is affecting the economy."

According to the Fannie Mae survey the 30-year fixed-rate mortgage (FRM) averaged 6.22 percent with an average 0.5 point. The previous week the average was 6.30 percent with 0.4 point. The 15-year FRM was down six basis points to 5.97 with points increasing from 0.4 to 0.5.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.96 percent compared to the previous week when it averaged 6.01. Points were unchanged at 0.5. The one-year Treasury-indexed ARM was at 5.49 percent, down from 5.52 percent with points increasing from 0.6 to 0.7.

The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ended February 23 showed a similar pattern. The average contract rate for a 30-year FRM decreased from 6.19 percent to 6.16 percent with points, including the origination fee, up to 1.05 from 0.88. The 15-year FRM averaged 5.84 percent, a drop of 4 basis points while points increased to 1.19 from 1.03.

The one-year ARM was the only product to increase, going from 5.81 to 5.92 percent although points decreased to 0.77 from 0.88.

Mortgage application volume for the week was up 3.2 percent on a seasonally adjusted basis and with an adjustment for the holiday shortened week from the week ended February 16. On an unadjusted basis activity was down 5.4 percent from the previous week and was up 8.8 percent compared to the same week in 2006.

Applications to refinance continue to lose market share. Last week that market segment represented 43.2 percent of all mortgage applications compared to 44.9 percent the previous week. Adjustable rate mortgage applications were also down a tiny bit, representing 21.1 percent of all applications against 21.2 the week before.