For the third straight week, 30-year fixed mortgage rates were unchanged at its record low of 3.87% said Freddie Mac in its weekly survey.

With the current coupon yield at around 2.87%, the primary-secondary mortgage spread is at around 100 basis points or so, which is near some of its widest levels in MBS market history, Deutsche Bank Securities said in recent research.

They added that this spread gap signals "mortgage rates should remain extraordinarily stable relative to other market benchmarks — whether those benchmark rates go up or down."

This is reflective of the capacity constraints at the mortgage lenders who aren't inclined to add employees despite increased activity from creditworthy borrowers taking advantage of historical low rates and from credit-impaired borrowers that can use Home Affordable Refinance Program or HARP, analysts said.

In addition to less competition, Deutsche analysts noted that it is harder these days for originators to ramp up business because of the increased time in training employees to reduce putback risk. Also given the increased complexity of the process, productivity is lower.

Under this environment for MBS, they said this stability in mortgage rates should reduce their realized negative convexity. It should also keep refinancing activity holding in the mid- to lower 4000 area on the Mortgage Bankers Association's Refinance Index.

For the weeks ending Feb. 3 and 10, the Refinance Index reported at 4500.7 (+9.4% from the prior week) and 4538 (+0.8%).

Freddie Mac also reported 15-year fixed mortgage rates were steady at 3.16%; 5/1 hybrid ARM slipped one basis point to 2.82%, while one-year ARM rates rose six basis points to 2.84%.

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