After four weeks of increases, mortgage rates turned lower in the week ending Aug. 30 as yields rallied last week in response to the Federal Open Market Committee minutes.

According to Freddie Mac's survey, 30-year fixed mortgage rates declined seven basis points to 3.59%, matching rates in the second week of August and 10 basis points above the historical low of late July.

Meanwhile, 15-year fixed and one-year ARM rates both fell three basis points to 2.86% and 2.63%, respectively, with the latter at a new record low, while 5/1 hybrid ARMs averaged 2.78% versus 2.80% previously.

The improvement in rates was reflected somewhat in yesterday's report from the MBA for the week ending Aug. 24, which recorded the decline in the Mortgage Bankers Association Refinance Index slowing from the prior week to -5.7% (to 4347) versus 9.2% which suggests some response from refinancers.

Still, borrowers have had months to take advantage of record low rate levels, while this week and next may be tempered by end of summer vacations and the Labor Day holiday indicating a muted response is likely in next week's report.

Rates will need to move substantially lower to cause activity to jump back towards its recent high of 5453 at the end of July.

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