Fixed mortgage rates moved higher, according to Freddie Mac's weekly survey. The 30-year fixed mortgage rate averaged 4.91% with an average 0.7 point, up from 4.82% last week.

For the month of May, rates averaged 4.86%, a modest five basis points higher than April's average. Despite the modest increase in mortgage rates, the Mortgage Bankers Association's (MBA) Refinance Index is down 26% in the first three weeks of May from April's average, and the decline is likely to increase based on this week's rates action. In turn, this could lead to downward revisions to June prepayments (released in July), which are currently projected to increase around 10%.

The 30-year conforming loan rate is well above 5% now, and back to February levels, and will likely limit application activity. The impact of higher rates in the week ending May 22 led to a 20% drop in the Refinance Index to 3890 — its lowest level since early March, according to the MBA. Credit Suisse analysts warned that if mortgage rates remain at current levels, the index could drop below 2000.

Among other terms, 15-year fixed rate and 5/1 hybrid ARM rates rose three basis points to 4.53% and 4.82%, respectively, while one-year ARM rates declined 13 basis points to 4.69%.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.