The 30-year fixed mortgages averaged one basis point higher to 4.24% with an average 0.8 point in the week ending Nov. 4, according to Freddie Mac.

This places the no-point rate in the mid-4.4%s. Meanwhile, 15-year fixed rates declined three basis points to 3.63%, as ARM rates set new record lows.

The 5/1 hybrid ARMs fell two basis points to 3.39% and one-year ARMs averaged 3.26% compared to 3.30% last week.

ARM rate levels contributed to an increased share of applications with ARMs as a percent of total applications ticking up to 5.4% from 5.3% in the most recent Mortgage Bankers Association (MBA) survey for the week ending Oct. 29.

Despite historically low mortgage rates, refinancing activity is unimpressive as many homeowners are unable to respond because of credit-impairment, and further deterioration is expected in the housing market before it gets better.

"As we near the end of 2010, the housing market remains fragile, and has recently come under renewed pressure from slowing economic growth, weaker employment and foreclosure uncertainties," said Freddie Mac CEO Charles E. Haldeman, Jr. regarding the housing outlook. "We believe that it will be a considerable time until the housing market has a sustained recovery."

At this time, further declines in home valuations are expected into 2011. Wells Fargo analysts, for example, believe home prices can fall another 13%.

Because of the latest foreclosure crisis, Fitch Ratings analysts currently expect the extension in foreclosure and liquidations to have an adverse consequences on home prices as well as "prevent sustained home price increases for a number of years."

They currently predict around a further 10% decline in home prices nationally, with the majority of the adjustment occurring by the end of 2012.

Furthermore, refinancing activity in the coming weeks will be influenced by the end-of-year holidays. Heading into the final two months of 2011, prepayment speeds for November and December, which will be reported in December and January, respectively, are currently projected to be flat to up 5% across the stack.

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