The flight to safety pressed mortgage rates lower with 15-year fixed, 5/1 hybrid ARMs and one-year ARMs all setting new record lows for the week ending August 11.  15-year rates slipped four basis points to 3.50 percent, hybrids averaged 3.13 percent versus 3.18 percent last week, and one-year ARMs plunged 13 basis points to 2.89 percent.Meanwhile, the 30-year fixed mortgage rate dropped to its lowest level for 2011, averaging 4.32 percent compared to 4.39 percent last week. It remains 15 basis points above its record low of 4.17 percent.Deutsche analysts said that despite the sharp drop in Treasury rates, the 30-year primary mortgage rate is likely to be sticky between 4.0 percent and 4.25 percent.  That is the result of capacity constraints. They noted in their daily MBSTrader that there is nearly $1 trillion of mortgages with note rates between 4.85 percent and 5.15 percent in agency MBS pools. As rates decline through 4.20 percent, "this mostly clean set of borrowers would become refinanceable, having over 65 bps of rate incentive," they said.However, employment in the origination business is down 20,000 from last fall, they said in their weekly research yesterday, and new guidelines from the GSEs that become effective this fall will require them to devote more resources to servicing/foreclosures versus origination. This creates an incentive for bankers to manage volume by keeping rates and MBS prices high. Indeed, Deutsche said the primary-secondary mortgage spread is at around 90 basis points compared to an average spread over the past five years of 60 basis points.With the further decline, Credit Suisse projects the MBA's Conventional Refi Index could pop up towards 4500 for the week ending August 12 from 3881.  This suggests a print of 4200 on the Composite Refi Index from 3626 reported yesterday.The flight to safety pressed mortgage rates lower with 15-year fixed, 5/1 hybrid ARMs and one-year ARMs all setting new record lows for the week ending Aug. 11.The 15-year rates slipped four basis points to 3.50 %, hybrids averaged 3.13% versus 3.18% percent last week, and one-year ARMs plunged 13 basis points to 2.89%.Meanwhile, the 30-year fixed mortgage rate dropped to its lowest level for 2011, averaging 4.32% compared to 4.39%t last week. It remains 15 basis points above its record low of 4.17%.Deutsche Bank Securities analysts said that despite the sharp drop in Treasury rates, the 30-year primary mortgage rate is likely to be sticky between 4.0% and 4.25%.  That is the result of capacity constraints. Analysts noted in their daily MBSTrader that there is nearly $1 trillion of mortgages with note rates between 4.85%  and 5.15% in agency MBS pools. As rates decline through 4.20%, "this mostly clean set of borrowers would become refinanceable, having over 65 bps of rate incentive," they said.However, employment in the origination business is down 20,000 from last fall, Deustche analysts said in their weekly research yesterday, and new guidelines from the GSEs that become effective this fall will require them to devote more resources to servicing/foreclosures versus origination.This creates an incentive for bankers to manage volume by keeping rates and MBS prices high. They added that  primary-secondary mortgage spread is at around 90 basis points compared to an average spread over the past five years of 60 basis points.With the further decline, Credit Suisse analysts projected the Mortgage Bankers Association's Conventional Refinance Index could pop up towards 4500 for the week ending Aug. 12 from 3881.  This suggests a print of 4200 on the Composite Refinance Index from 3626 reported yesterday. 

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