Long-term mortgage rates continued to decline for the week ending Dec. 11, bringing the 30-year fixed rate mortgage (FRM) average down to 5.47 percent with an average 0.7 point — the lowest level in more than four years — according to the weekly mortgage market survey released Thursday by Freddie Mac (FRE). The average has not been lower since the week of March 25, 2004, when it stood at 5.4 percent. The average this time last year was 6.11 percent. The 15-year FRM rate averaged 5.2 percent with an average 0.7 point, also down from last week. Last week marked the lowest it’s been in 10 months, since Feb. 7, 2008 when it averaged 5.15 percent, according to Freddie Mac’s data. Short-term, adjustable-rate averages increased, however, with five-year Treasury-indexed hybrid ARMs averaging 5.82 percent with an average 0.6 point, up from 5.77 last week. One-year Treasury ARMs averaged 5.09 percent this week with an average 0.4 point, up from last week’s average of 5.02 percent. A separate survey featured by Bankrate Inc. also found that fixed-rate mortgage rates continued to fall during the same week while adjustable-rate mortgage rates climbed. Fixed-rate mortgages continued to fall in the week ending Dec. 10, dropping to their lowest point since February, the survey’s author wrote. The average 30-year FRM average fell to 5.8 percent, while the average 15-year FRM — a popular option for refinancing — dropped to 5.51 percent, the lowest rate since March. The average jumbo 30-year fixed sank to 7.37 percent. The one-year ARM average jumped to 6.09 percent. The popular 5/1 ARM was up slightly to 6.17 percent. Although the author of Bankrate’s weekly rate roundup offered no commentary on the likely cause of the continued rate declines, it was suggested last week that long-term mortgage rates plummeted in response to announcements that the Federal Reserve would begin buying housing-related debt and mortgage-backed securities from the GSEs. Other market conditions like unemployment continue to influence the trends of mortgage rates and application volume, which showed consumers favoring refinance options. “Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week, allowing fixed-rate mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist. The U.S. Labor department reported on Dec. 5 that the nationwide unemployment rate had reached an astounding 6.7 percent in November, shedding 533,000 nonfarm jobs — the 11th straight monthly decline and the largest since December of 1974. An alternative assessment of unemployment — which includes discouraged workers and those whose hours have been cut back to part-time — rose to 12.5 percent in November from 11.8 percent. The number of workers forced to work part-time rose by 621,000 to 7.3 million. With unemployment rising, applications for mortgage loans fell as more consumers were removed from the home buying market due to lack of employment. Mortgage application volume fell 7.1 percent on a seasonally-adjusted basis, following a dramatic jump in volume during the week of Thanksgiving, according to data released Wednesday morning by the Mortgage Bankers Association. The MBA said refinancing applications dominated last week, as rates held relatively in a tight range; refi apps represented 73.7 percent of all applications, the group said. As has been the case pretty much throughout the current crisis, however, a separate index maintained by Mortgage Maxx LLC actually found that mortgage applications had gained last week, and by no small margin; the MAX, as the index is called, corrects for multiple applications in a single household, and is used by Wall Street researchers as part of prepayment modeling efforts. The MAX registered a whopping 34.9 percent weekly gain, which publisher Paul Desclooux attributed to “the promise of 4.5 percent mortgage rates,” in reference to press leaks in the past week suggesting that the Treasury was readying a plan to intervene in secondary mortgage markets to push primary mortgage rates to a pre-set level, in an effort to stimulate demand. Visit www.freddiemac.com and www.bankrate.com for further details. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.