The 30-year fixed mortgage rates declined five basis points to an average of 4.32% with an average 0.8 point in the week ending Sept. 30, according to Freddie Mac's weekly survey.

This matched the all-time record low set four weeks ago. The no-point rate, however, remained slightly above 4.50%. Frank Nothaft, the GSE's chief economist, attributed the decline to the recent flight to quality brought on partly by reduced confidence by consumers and businesses in the state of the economy. 

For the month of September, 30-year fixed mortgage rates averaged 4.35%, which is down from a 4.43% average in August. 

Despite the drop in mortgage rates, refinancing activity as measured by the Mortgage Bankers Association's Refinancing Index has slipped nearly 4% since the end of August through Sept. 24.

Factors contributing to the slowing in activity have included expectations by borrowers of lower mortgage rates in the future as mortgage bankers add capacity and from the Federal Reserve engaged in additional quantitative easing. In addition, the economy and labor markets remain weak while credit conditions remain tight. 

Current prepayment estimates for October (reported in November) project speeds to increase less than 5% on 30-year Fannies with the largest percent increases in 4.5s and 5s.

Freddie Mac also reported 15-year fixed mortgage rates set a new record low of 3.75%, down seven basis points from the previous report.  The 5/1 hybrid ARMs were also at a new low of 3.52% from 3.54%, while one-year ARM rates increased two basis points to 3.48%.

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