Freddie Mac reported today that the average 30-year fixed-rate mortgage was 6.01% in its latest Primary Mortgage Market Survey, down 4 basis points from last week and 14 BPS from a year earlier. The 15-year fixed rate was unchanged from last week at 5.60%.

Freddie Chief Economist Frank Nothaft attributed the movement to Federal Reserve remarks that raised optimism financial markets will recover later this year.

CNNMoney quoted the 10-year Treasury yield at 3.86% near midday, rising from 3.80% a week earlier and suggesting fixed mortgage rates are headed higher.

The half of the 100 mortgage bankers, mortgage brokers and other industry “experts” surveyed by Bankrate.com for the week May 15 to May 21 project rates will increase by more than 0.02% during the next 35 to 45 days. Nearly one-third of the group expect rates to fall.

The 5-year Treasury-indexed adjustable-rate mortgage averaged 5.57% in Freddie’s latest survey, 10 BPS lower than the prior week.

The average 1-year Treasury-indexed ARM was 5.28%, falling 11 BPS from a week earlier, Freddie said. The U.S. Treasury Department reported the yield on the 1-year Treasury itself was 2.11% yesterday, jumping from 1.94% seven days earlier.

The 6-month London Interbank Offered Rate was reported at 2.83% yesterday by Bankrate.com. Last week, LIBOR stood at 2.88%.

ARMS represented 8% of applications tracked by the Mortgage Bankers Association for the week May 9, up from 7% the previous week.

MBA said total mortgage applications rose 3% from last week, sending the Market Composite Index to 674.4. Refinances drove the overall activity, rising 7% from the prior week. Refinances accounted for 49% of the latest week’s activity, up from 47% in last week’s report.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: mtgsam@aol.com