Similar to the Mortgage Bankers Association (MBA) report earlier this morning, Freddie Mac stated that new lows were set on 30- and 15-year fixed mortgage rates as well as one-year ARM rates for the week ending July 5.
The 30-year rate averaged 3.62%, down four basis points from last week; 15-year fixed rates declined five basis points to 2.89%, and one-year ARM rates fell to 2.68% from 2.74%. Meanwhile, 5/1 Hybrid ARM rates held unchanged at 2.79% which is two basis points above its historic low.
Despite new lows in mortgage rates, a muted response is expected in refinance application activity as many borrowers have already responded to consecutive records that began in early May. The MBA's Conventional Refinance Index was down nearly 5% in the week ending June 29 to 4372 as mortgage rates held at a low of 3.66% for that week and has dropped nearly 22% since it hit 5590 for the week ending June 8 when mortgage rates averaged 3.67%.
The current outlook regarding conventional prepayments is for speeds to increase around 15% to over 20% in both June, which are going to be reported tomorrow, and July in response to lower rates. In June, refinancing activity averaged 19% higher than May as mortgage rates averaged 3.68% from 3.80% which will influence prepayments in July (reported in August).