For the second week in a row, Freddie Mac reported a decline in long and short term mortgage rates. Rate drops were attributed to market speculations on the future actions of the Fed’s.

In its Primary Mortgage Market Survey (PMMS), Freddie Mac reported that the 30-year fixed-rate mortgage (FRM) averaged 6.26 percent with an average 0.6 point for the week ending July 17, 2008. This dropped from last week’s average of 6.37 percent. Same time last year, the 30-year FRM averaged 6.73 percent.

The 15-year FRM this week averaged 5.78 percent with an average 0.6 point, down from last week’s average of 5.91 percent. A year ago, the 15-year FRM averaged 6.38 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.80 percent this week, with an average 0.6 point, down from last week when it averaged 5.82 percent. A year ago, the 5-year ARM averaged 6.35 percent.

One-year Treasury-indexed ARMs averaged 5.10 percent this week with an average 0.6 point, down from last week when it averaged 5.17 percent. At this time last year, the 1-year ARM averaged 5.72 percent.

"Mortgage rates fell this week amid market speculation that the Federal Reserve (Fed) may not raise the overnight bank-lending rate this year after all," said Frank Nothaft, Freddie Mac vice president and chief economist. "Some of the factors motivating the change in market perceptions this week included retail sales for June rising at the slowest pace since February and consumer sentiment in July holding at low levels not seen since 1980.

"In addition, in his July 15th semi-annual testimony before Congress, Fed chairman Bernanke indicated that the FOMC participants had considerable uncertainty surrounding their outlook for economic growth."
 

reference: FreddieMac