Both mortgage interest rates and the demand for home loan funding tapered off in the past week, according to separate reports from the Mortgage Bankers Association and mortgage giant Freddie Mac.

Freddie Mac’s Primary Mortgage Market Survey found that during the week ended February 12, 2009, the average rate on a 30-year fixed rate loan, excluding points, fell to 5.16 percent from 5.25 percent the week before. One year ago, the average rate was 5.72 percent.

Rates on the 15-year fixed rate mortgage slid to 4.81 percent, from 4.92 percent one week earlier. Last year at this time, the average rate was 5.25 percent. One-year adjustable rate mortgages averaged a rate of 4.94 percent, growing slightly from 4.92 percent, but still down from last year’s average of 5.00 percent.

“Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008’s peak set on July 24, 2008, offering many homeowners an incentive to refinance,” said Frank Nothaft, Freddie Mac vice president and chief economist. “…The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2 percent in the fourth quarter of 2008. As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50 percent for the past 11 weeks and averaged 80 percent over this period, according to the Mortgage Bankers Association.”

However the MBA’s weekly survey reported that the total number of mortgage applications was down almost 25 percent during the previous week. The group’s refinance index fell 30.3 percent while the home purchase index dropped 9.8 percent to the lowest level in over 8 years.

The falling demand for mortgage money is apparently a reflection of rates reaching a two month high during the week ended February 6, 2009 as well as people choosing to move back to the sidelines waiting for home prices and interest rates to keep falling.