Fixed mortgage rates increased for the fifth straight week according to Freddie Mac's Weekly Primary Mortgage Market Survey for the week ended April 27 and adjustable rate mortgages (ARMs) logged the sixth consecutive week of increases.

The 30-year fixed rate mortgage increased from 6.53 percent during the week ended April 20 to 6.58 percent although fees and points dropped from 0.6 to 0.5. The 15-year fixed rate was up four basis points to 6.21 percent with fees and points steady at 0.5.

In the ARM corner the 5/1 ARM rate pulled even with the 15-year fixed rate at 6.21 percent, up from 6.16 the previous week while fees and points were down from 0.8 to 0.6 and the 1-year ARM increased five basis points to 5.68 percent. Fees and points dropped off from a previous recent record 0.9 to 0.7.

In a separate report Freddie Mac announced that cash-out financing of its owned loans recently hit the highest level since the third quarter of 1990.

First quarter 2006 figures show that 88 percent of Freddie Mac-owned loans that were refinanced during the quarter resulted in new mortgages that were at least five percent higher than the loans they replaced. During the fourth quarter of 2005 the share of refinanced loans that were termed "cash-out" was 81 percent. Those borrowers refinancing a mortgage at a lower amount - putting more money down at closing - was down to 4%, the lowest rate since at least the fourth quarter of 1998 - the earliest date for which information was reported.

Overall, refinancing accounted for 44 percent of all mortgage applications during the first quarter as compared to 45 percent during the last quarter of 2005. According to Frank Nothaft, Freddie Mac vice president and chief economist, "almost no one is refinancing to reduce their interest rate..." Nothaft continued to explain that the first quarter of 2006 was the first time in 20 quarters when the interest rates for new mortgages was higher than the old rate for more than half of those who were refinancing. It is possible, the report said, that increasing interest rates on many home equity loans, which tend to be tied to the prime rate, have been rising fast enough to make refinancing the first mortgage lien to pay off the equity lien feasible. The prime rate is currently at 7.75 percent with a distinct probability of rising higher. Home equity lines often put a margin of one or two points on top of that making a rate of 6.5 percent, particularly a fixed rate of 6.5 percent appear to be a bargain. The median age of the loans being refinanced was 3.0 years.

Freddie Mac estimated that $170 billion in home equity will be converted to cash through refinancing during 2006.

During the first quarter the median ratio of old-to-new interest rates was 0.98 which means that one half of borrowers who were refinancing mortgages ended up with a new loan with a rate that was two percent higher than the old rate.

The Freddie Mac report also stated that those properties that were refinanced during the first quarter experienced a median increase in home values of 30 percent since the last time a loan was closed on the property.

The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ended April 28 also reported across-the-board rate increases. The average contract interest rate for 30 year fixed-rate mortgages increased four basis points to 6.57 percent with points, including the origination fee, increasing from 1.10 to 1.18. The 15-year fixed-rate mortgage was up slightly from 6.18 to 6.19 percent with points up 0.07 to 1.18. The one-year ARM also increased from 5.96 percent to 6.08 percent and points also increased from 0.82 to 0.85. All MBA figures are for 80 percent loan to value originations.

Mortgage application volume was up 8.8 percent on a seasonally adjusted basis and 9.6 on an unadjusted basis from the previous week but, as has been the case for some time, was down from the same week last year; this time the differential was 15.6 percent.

Refinancing as a share of all mortgage activity was down to 35.2 percent of all loan applications from 36.7 the previous week. This is the lowest share of the market claimed by refinancing since late June 2004. The ARM share of mortgage activity increased fractionally from 28.2 percent to 28.3 percent for the week.