Mortgage rates declined in the week ending Dec. 15, according to Freddie Mac's weekly survey. 30-year rates fell five basis points to 3.94% with an average 0.8 point, matching its all time low set in the week ending Oct. 6.

With the no-point rate at 4.14%, borrowers underlying 4.5% and some 4.0% coupons are within the refinancing window again.

Meanwhile, 15-year fixed set a new record low of 3.21%, down from 3.27% last week. Adjustable mortgage rates were mixed with 5/1 hybrid ARMs lower by seven basis points to 2.86%, while one-year ARM rates edged one basis point higher to 2.81%.

This should continue to stimulate mortgage application activity, especially HARP 2.0 applications. Since the end of November, the MBA's Refi Index has risen 26% and some part of this has been associated with acceptance of HARP 2.0 applications which began on Dec. 1.

Most analysts expect rates need to dip towards 3.8% in order to see a more significant response in refinancing and that could match 2010's high of 5000+.

Frank Nothaft, Freddie Mac vice president and chief economist, stated that: "“Mortgage rates were at or near all-time record lows this week amid a rough environment for housing. In its Dec. 13 monetary policy announcement, the Federal Reserve reiterated the housing market remains depressed. Over the first nine months of 2012, households lost almost $400 billion in property values which contributed to a $1.4 trillion reduction in overall net worth."

Additionally, Nothaft noted that serious delinquency rates (90 or more days delinquent plus foreclosures) on mortgages rose slightly between June 30 and Sept. 30. This broke a six-quarter consecutive drop, according to the Mortgage Bankers Association.”

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