After rising for four straight weeks, Freddie Mac's weekly mortgage rate survey showed double digit drops in mortgage rates this week. 

The GSE's Chief Economist Frank Nothaft attributed the easing to "the release of the latest Federal Reserve's  policy statement that it expects inflation to moderate later this year and the reporting of May's timid increase in core personal consumption prices." He also said there were less chances of future rate hikes in the Fed Funds Futures.

According to the survey results, the 30-year fixed mortgage rate fell 10 basis points to 6.35%, while 15-year fixed mortgage rates were down 12 basis points to 5.92%. 

On the adjustable rate side, five-year hybrid ARMs dropped 21 basis points to 5.78%, and one-year ARMs averaged 5.17% compared to 5.27% previously. 

While the July 4th holiday will likely skew application activity this week, the improvement in mortgage rates should provide a limited boost. 

For the week ending June 27, application activity was higher in response to improvement in mortgage rates. The Mortgage Bankers Association reported the Refinance Index increased nearly 5% to 1269, moving off a seven-year low.

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