Fixed mortgage rates were virtually unchanged while ARM rates fell, according to Freddie Mac's latest Mortgage Rate Survey

The GSE's Chief Economist Frank Nothaft attributed the results to the reports on continued inflation. "Although the gross domestic product grew at a faster rate in the first quarter than originally reported, consumer spending rose only 1 percent, representing the smallest increase since the 2001 recession," Nothaft said.

The 30-year fixed mortgage rate increased just one basis point to 6.09%, while 15-year fixed rates were one basis point lower to 5.65%. Meanwhile, five-year hybrid and one-year ARM rates dropped 11 and 16 basis points, respectively, to 5.51% and 5.06%. 

Mortgage application activity is expected to increase this week, influenced by the previous report's seasonal adjustment for the Memorial Day holiday.

Yesterday the Mortgage Bankers Association (MBA) reported a 25.7% drop in the Refinance Index to 1496.1 for the week ending May 30. This was the lowest refinancing activity has been since the week ending July 28, 2006 when it was at 1417.2 and the 30-year fixed mortgage rate was at 6.72%. 

The MBA used just a 1/2-day adjustment rather than a full day to reflect the Memorial Day holiday. This is a factor to the particularly large decline.

Outside of this, activity has been inhibited by the poor housing market, ongoing price depreciation and tighter lending standards.

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