Mortgage rates edged up a bit during the week ended May 18 according to the Weekly Primary Mortgage Survey conducted by Freddie Mac.

The 30-year fixed rate mortgage averaged 6.60 percent, two basis points higher than the previous week. Fees and points were unchanged at 0.5.

The 15-year fixed rate increased three basis points to 6.20 percent with fees and points constant at 0.5. The 5/1 year adjustable rate mortgage averaged 6.23 compared to 6.22 the previous week. Fees and points were again unchanged at 0.5. The 1-year ARM was unchanged at 5.62 percent with a 0.7 average for fees and points.

The North Central region of the U.S. deviated substantially from the rest of the country in the fixed rate category. The 30 year rate was 6.73 in that region while the average in the other four areas varied in a narrow range of 6.57 to 6.58 percent. The 15-year rate in the North Central region averaged 6.27 compared to a range of 6.18 to 6.21 in the rest of the country. The higher rates in the North Central region, however, were compensated for by extremely low fees and points - 0.3 for both loan products compared to 0.5 or 0.6 in the rest of the country.

There was also substantial variation for the 5/1 hybrid ARM. Rates ranged from 6.10 percent in the Northeast to 6.38 in the North Central region with the other regions scattered evenly along that axis. There was a narrower range for the traditional one-year ARM; highest in the West at 5.66 and lowest in the Northeast at 5.58 percent.

Frank Nothaft, Freddie Mac's vice president and chief economist commented that "while financial markets try to decipher the spate of recently released economic reports, mortgage rates drifted slightly higher. The current debate is between rising inflation and slower consumer spending. Until the market finds out which influence will be the strongest (sic), mortgage rates should continue to fluctuate as they have the last couple of weeks."

Rates were reported moving in the opposite direction according to the Weekly Mortgage Applications Survey for the week ended May 19 as published by the Mortgage Bankers Association. Its report which includes responses from approximately half of the nation's lenders, indicated the average contract interest rate for 30-year fixed rate mortgages was 6.61 percent, down from 6.66 percent with points, including the origination fee, unchanged at 1.17. The 15-year fixed-rate mortgage also declined from 6.26 percent the previous week to 6.23 percent with points down slightly to 1.16 from 1.17. The one-year ARM dropped five basis points to 6.07 with fees down from 0.89 to 0.87. All MBA figures are for 80 percent loan to value products.

It is interesting to note that, in spite of heading in different directions, fixed rate loans were reported at very close to the same level in both surveys while better than one-half point separated the averages for the one-year ARM.

Application volume was down 6 percent on a seasonally adjusted basis from the previous week and 6.2 percent on an unadjusted basis. Activity was reported to be down 23 percent from the same week in 2005.

Refinancing applications increased from a 35 share to 35.7 percent of all mortgage applications and the volume of adjustable rate mortgages was once again over 30 percent (30.5) compared to 19.9 percent the previous week. This was the highest share of loan volume enjoyed by the ARM sector since January 27.