Freddie Mac reported that 30- and 15-year fixed mortgage rates as well as 5/1 hybrid ARM rates dropped to new record lows for the week ending Aug. 5.

The 30-year rate averaged 4.49% with an average 0.7 point, down five basis points from last week.  This places the no point rate at about 4.67%.

Freddie Mac Chief Economist Frank Nothaft attributed the declines to the recent GDP report.

"Annual revisions cut the cumulative GDP growth in half over the past three years ending in the first quarter of 2010 from 1.4 percent to 0.6%," he said. "This reduces inflation pressures and allows longer-term rates room to ease."

Meanwhile, 15-year fixed mortgage rates also fell five basis points to 3.95%, Hybrid ARMs plunged 13 basis points to 3.63%, and one-year ARM rates were lower by nine basis points to 3.55%.   

Credit Suisse analysts noted in research today that the 2009 vintage was at the cusp of the important 4.50% refi threshold, and they warned that September speeds could more than double on 30-year 4.5s from July levels (reported later today).  "This poses considerable risk to September/October dollar rolls," they added.

The Mortgage Bankers Association Refinance Index has continued to have a muted response to the level of mortgage rates. 

For the week ending July 30, the Refinance Index rose 1.3% to ~3966 as mortgage rates hovered in the mid-4.5% area. 

Wells Fargo analysts said that the modest refinancing response to mortgage rate levels confirms their "thesis that convexity costs have declined substantially."  

Despite the historically attractive levels, Wells analysts do not expect home prices improving (as measured by the Federal Housing Finance Agency House Price Index), and currently project the index will decline 10% to 15% year-over-year in 2010.

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