Freddie Mac reported 30-year fixed mortgage rates were unchanged at its record low 3.87% for the week ending Feb. 9.

With the no-point rate at around 4.07%, borrowers underlying the 4.0% coupon continue to have a refi incentive and that should continue to buoy refinancing activity.

Yesterday, for example, the Mortgage Bankers Association reported the Refinance Index jumped 9.4% to 4500.7, its fourth straight week above 4000 and matching its recent mid-January high as borrowers responded to the new record low rates.

Meanwhile, mortgage rates rose two basis points for 15-year fixed and one-year ARM rates to 3.16% and 2.78%, respectively. Meanwhile, 5/1 hybrid ARMs averaged 2.83% compared to 2.80% last week.

At current mortgage rates, nearly the entire conventional universe theoretically has a rate incentive; however, it remains difficult for many borrowers to refinance. JPMorgan Securities analysts pointed out in recent research that only 20% are considered "clean and can streamline" and 24% are seen as "moderately impaired.'

They added that while another 40% of borrowers have a clean profile, their loans were originated after May-2009 (the Home Affordable Refinance Program (HARP) cut-off date) and so are not eligible to refinance through HARP. They can refinance, but the streamline refi option is not available to them. The final 16% either have no rate incentive or are severely impaired.

This suggests it may be a struggle for the index to reach the 2011 high of 4866.7 recorded in mid-August.

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