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Average mortgage rates increased for the week, according to Freddie Mac's JWeekly Primary Mortgage Market Survey. Thirty-year fixed-rate mortgages averaged 3.55 percent, up 6 basis points from the previous week. The weekly average for the 15-year fixed-rate mortgage gained as well, increasing to 2.83 percent from 2.80 percent.

Both mortgage rates still remain far below their averages from one-year ago. In the same period last year, the 30-year average fixed-rate mortgage was 4.39 percent, and the 15-year average fixed-rate mortgage was 3.54 percent.

The Mortgage Bankers Association's Weekly Application Survey, which lags the PMMS by one week, reported an increase of 0.2 percent for the July 27, 2012 week. Refinancing accounted for the greatest share of the weekly volume, at 81 percent.

The MBA reported an average contract rate for loan balances below $417,500 of 3.75 percent for the week, while the rate for loans above that level was 4.01 percent.

Based on the August 3 week's reports, mortgage markets appear to continue seeing increased activity as borrowing and refinancing rates remain low.

Standard and Poor's also released their May 2012 S&P/Case-Shiller Home Price Indices report on Tuesday, July 31. The report showed a monthly increase of 2.2 percent in housing prices on a non-seasonally adjusted basis for the 20- and 10-City Composites. On a seasonally adjusted basis, both composites gained 0.9 percent.

On an annual basis, prices continued to remain low. For the one-year period, May 2012 through May 2011, the 20-City Composite fell 0.7 percent, and the 10-City Composite decreased by 1.0 percent.

The S&P/Case-Shiller Indices report is consistent with May existing-home sales analysis from the National Association of Realtors, which showed an increase of 2.93 percent in the national median existing-home price for the month of May.

Decreased housing inventory has been the leading reason for the short-term housing price appreciation, but long-term improvements will likely be dependent on labor market growth and fiscal policy decisions.

Source: Mortgage Market Weekly Update - (July 30-August 3, 2012)