Fixed and hybrid ARM rates set new record lows for the week ending Aug. 12, according to Freddie Mac.

The 30-year fixed mortgage rates averaged 4.44% with an average 0.7 point, down five basis points from last week. This is equivalent to a no-point rate of 4.62%. A no-point rate of 4.50% is generally perceived as the level that will significantly stimulate refinancing activity.

Even so, Barclays Capital analysts said that if the no-point rate declines to 4.50% they do not anticipate an over 40 CPR print on any major cohort — FNCL coupon/vintage.

Certainly current levels have not been particularly stimulating, as refinancing activity remains muted with the Mortgage Banker Association's Refinancing Index stalled at near 4000. This has been caused by mortgage banker capacity constraints.

In other loan options, 15-year fixed mortgage rates slipped three basis points to 3.92%, 5/1 hybrid ARMs declined seven basis points to 3.56%, while one-year ARMs averaged 3.53% compared to 3.55% previously.

Speeds are projected to be flat to down slightly for the September and October prepayment reports. This is partly because of a lower day count — 21 days in September and 20 in October.

JPMorgan Securities analysts believe that speeds are likely to peak in August/September as a result of the limited capacity at the mortgage bankers and the "sticky" behavior of primary/secondary spreads.

However, analysts still expect that they will remain at a plateau for an extended period as mortgage bankers have been more active in managing mortgage rates and their pipelines.

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