Mortgage financing giant Freddie Mac's (FRE) monthly report showed that whatever improvements there have been in credit markets underlying fundamentals are still declining.

Delinquencies on Freddie's portfolio nearly tripled to 2.95% in July from 1% a year earlier. Freddie holds a portfolio of $2.23 trillion in mortgages and is restricted to buying mortgages from the strongest borrowers. Delinquencies edged up slightly from 2.78% in June.

"July delinquencies showed no improvement whatsoever, and what incremental movement there was, the figures showed accelerating credit weakness," said Jim Vogel of FTN Financial.

The report also showed that Freddie is unwinding its portfolio of mortgage-related investments faster than had been expected by market observers.

The company's portfolio was $799.1 billion, below $800 billion for the first time since January, driven by a decrease in Freddie mortgage-backed securities held in portfolio, said Margaret Kerins of RBS Securities.

"The decrease in the retained portfolio reflects the relative richness of Agency MBS versus Agency debt," Kerins wrote in a note.

-By Andrew Edwards, Dow Jones Newswires; 212-416-2228; andrew.edwards@dowjones.com