Not surprisingly mortgage rates were higher in Freddie Mac's latest survey due to last week's sharp sell-off as risk taking was favored. The 30-year fixed mortgage rates averaged 4.60% with an average 0.7 point in the week ending July 7, up nine basis points from last week.

This brings the no-point rate up to 4.78%, which will likely lead to further declines in refinancing activity in the Mortgage Bankers Association's (MBA) next report based on the recent response. For example, in the three weeks ending July 1, the Refinance Index dropped 18% to ~2367 as mortgage rates increased from 4.49% to just 4.51%. Rates are too high for 4.5% coupons to refinance, while borrowers underlying the 5% coupon have already had several opportunities to refinance, which explains the poor response.

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