NEW YORK (CNNMoney.com) -- Mortgage rates fell for the first time in five weeks and should continue to hold steady in the near term, Freddie Mac reported Thursday,

The average rate on the 30-year fixed-rate mortgage was 6.74 percent for the week ending July 13, down from 6.79 percent the week before. A year ago, the 30-year mortgage rate averaged 5.66 percent.

Mortgage Rates 30 yr fixed 3.89% 15 yr fixed 3.21% 5/1 ARM 2.87% 30 yr refi 3.96% 15 yr refi 3.30% Find personalized rates:   Rates provided by Bankrate.com.

"June's employment report caught financial markets off guard. In response, long-term bond yields eased a bit this week," Frank Nothaft, Freddie Mac vice president and chief economist said in prepared statement.

"Combined with the financial market's expectation of only one more rate hike by the Federal Reserve this year, upward pressure on long-term rates eases considerably. This should keep mortgage rates relatively stable for the foreseeable future."

Further rate hikes by the Fed could help push mortgage rates higher still, though home loan rates are more closely tied to the Treasury market than to the Fed's short-term rate target.

Freddie Mac also said the average rate on 15-year fixed-rate mortgages fell 6.37 percent from 6.44 percent the previous week. A year ago, that loan averaged 5.25 percent.

Five-year adjustable-rate mortgages slipped last week, averaging 6.33 percent, down from 6.39 percent last week. The five-year ARM averaged 5.15 percent a year ago.

The average one-year ARM fell to 5.75 percent from 5.83 percent the previous week. At this time last year, the one-year loan averaged 4.39 percent.

For homeowners using adjustable rate mortgages, a rise in interest rates can mean increasing payments.

The Mortgage Bankers Association estimates that some $330 billion worth of ARMs will adjust in 2006 and $1 trillion worth will reset by the end of 2007. With a $200,000 loan adjusting upward from 4 percent to 6 percent, the monthly bill would increase to about $1,200, from $955.

_________________

Find mortgage rates in your area.

Higher prices, higher rates: The home buyer squeeze

Bargain hunting in a stormy market.