Freddie Mac reported a one basis point increase in 30- and 15-year fixed mortgage rates to 4.87% and 4.10%, respectively, with an average 0.7 point. 

With the 30-year no-point rate above 5%, a large portion of the credit-eligible universe remains outside of the refinancing window.

Investors' sensitivity to rate levels is evident in recent mortgage application activity. Since reaching a near term low of 4.76% for the week ending March 17, the Mortgage Bankers  Association's (MBA) Refinance Index has declined nearly 16% as of the week ending April 1. 

In the adjustable rate programs, 5/1 hybrid ARMs rose two basis points to 3.72%, while one-year ARMs declined four basis points to 3.22%. The relative attractiveness of ARM rates has helped ARM share of total applications. Yesterday, the MBA reported an increase to 6.1% from 5.7%.

Despite historically attractive rate levels, tight credit conditions, higher fees, poor housing values, and a still-weak labor market will continue to adversely impact refinancing activity and keep prepayments benign.

In March, new fees for FHLMC Golds and GNMA MBS led to a larger-than-expected decline in speeds, while FNMA will likely feel this effect in the next report as its higher delivery fees kicked in on April 1. 

At this time, April speeds (released on May 5) are expected to drop around 10% for conventional 30-years and by 5% on GNMAs. The factors influencing the report are a lower day count of 20 days, which will more than offset March's modest increase in refinancing activity as mortgage rates eased from their recent highs.

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