The result of Freddie Mac's Primary Mortgage Market Survey (PMMS) showed that the 30-year fixed-rate mortgage (FRM) averaged 6.35 percent with an average 0.6 point for the week ending July 3, 2008, down from last week when it averaged 6.45 percent. Last year at this time, the 30-year FRM averaged 6.63 percent.

The 15-year FRM this week averaged 5.92 percent down from last week when it averaged 6.04. A year ealier,  the 15-year FRM averaged 6.30 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.78 percent this week down from last week when it averaged 5.99 percent. At this time last year, the 5-year ARM averaged 6.29 percent.

One-year Treasury-indexed ARMs averaged 5.17 percent this week down from last week when it was 5.27 percent. A year ago, the 1-year ARM averaged 5.71 percent.

"Mortgage rates reversed their three-week rise, falling this week after the release of the latest Federal Reserve’s (Fed) policy statement that it expects inflation to moderate later this year and the reporting of May’s timid increase in core personal consumption prices," said Frank Nothaft, Freddie Mac vice president and chief economist. "According to recent trading activity in federal funds futures, market participants lowered somewhat their expectations of future rate hike hikes by the Fed compared to last week.

"Housing affordability fell in April due to gains in median house prices during the month, according to the National Association of Realtors. However, even with the recent erosion in affordability, homes were still more affordable in April than during the 2005-2007 period of skyrocketing house prices."

source: FreddieMac