Freddie Mac reported a surge in fixed related mortgage rates in the week ending Nov. 18. The 30-year rate jumped 22 basis points to 4.39% with an average 0.9 point — this places the no point rate above 4.60%. 

Rates are at their highest level since mid-August. The 15-year rates and 5/1 hybrid ARM rates also gained a respective 19 and 15 basis points to 3.76% and 3.40%.  Meanwhile, one year ARM rates were unchanged at 3.26%.

Yesterday the Mortgage Bankers Association reported a nearly 17% drop in the Refinance Index to ~3831 in the week ending Nov. 12 as mortgage rates gained.

However, at the same time the index was not adjusted for the Veterans' Day holiday. While it's not a holiday for many firms, there was likely some slowing in activity related to this. 

Bank of America Merrill Lynch analysts calculated that a 25% adjustment would have resulted in a flat index. With the current increase in mortgage rates and points, it is unlikely to lift activity much from this four-month low with more borrowers now outside the refinancing window.

Credit Suisse analysts said that the refinancing response has peaked for now and rate levels support this on top of the tight credit conditions and credit impaired borrowers.

They believe speeds on 2008 FNMA 5s have peaked in the low 40s CPR — which is less than half of what it hit in 2003. 

A rally to a 4% mortgage rate from 4.25%, Credit Suisse analysts said, should see a three to five CPR increase on FNMA 5s and 10 CPR in 4.5s, while higher coupons will remain muted without the aid of some new government program, which is generally deemed unlikely.

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