While mortgage rates were little changed over the week, they have moved slightly off historic lows, while burnout is also a contributing factor as mortgage rates continually set new lows for 11 of 13 weeks ending July 27. In addition, rates have held below 4.0% since the end of March.

Mortgage applications declined 4.5% in the week ending Aug. 10 with both refinancing and purchases lower.

The Mortgage Bankers Association reported its Refinance Index declined 5.1% to 5077.3. Since the index's peak at the end of July (5453), refinancing activity has fallen nearly 7%. Meanwhile, the Purchase Index was 2% lower to 175.9 and is the lowest it has been since late February.

The contract interest rate for 30-year fixed rate conforming loans averaged 3.76%, reported unchanged from the prior week, while FHA rates slipped one basis point to 3.53%.

Between the lower refinancing activity so far this month as well as a lower number of collection days in September (19 versus 23 in August), prepayments (reported in October) for 30-year conventional speeds are expected to decline close to 10% on average from August expectations.

Meanwhile, between record low mortgage rate levels in July along with the higher day count in August, speeds on 30-year FNMAs are projected to increase around 10% on average this month. 2011 and 2010 vintage 3.5s through 4.5s are projected to record the largest percentage gains at 12% to 15%, while the HARP-able cohorts are predicted to rise 8%.

At this time, August looks to be the peak in CPRs on the HARP coupons, although some upcoming tweaks to the program should keep speeds elevated into 2013.


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