Freddie Mac reported 30-year fixed mortgage rates plunged 10 basis points to 3.88% as of the week ending April 12 in response to the recent flight to quality.

The rate is just one basis point above its record low recorded in February. With the no-point rate at 4.06%, more borrowers underlying 4.0% coupons have an improved incentive to refi.

As a result, the Mortgage Bankers Association's Refinance Index may show some firming in the report for the week ending April 13.

In the week ending April 6, refinancing activity declined 3.1% to 3467. However, it was not adjusted for the Good Friday holiday. Morgan Stanley analysts said the slight decline without adjustment suggested the pace of applications was robust during the week "belying the decline in the headline numbers."

The 15-year fixed mortgage rate also fell 10 basis points to 3.11% and is at a new record low. Meanwhile, 5/1 hybrid ARMs slipped just one basis point to 2.85% while one-year ARM rates increased to 2.80% from 2.78%.

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