Freddie Mac reported further increases in mortgage rates for the week ending Dec. 2 following the latest sell-off.

The 30-year fixed mortgage rates averaged 4.46% with an average 0.8 point, which is up six basis points from last week. This is the third straight week of increases following the 4.17% record low for the week ending Nov. 11. Mortgage rates are now at their highest level since early August.

With the no point rate in the mid-4.60s, this further reduces the universe of borrowers with an incentive to refinance — on top of the usual limiting factors in this environment: tight credit standards, poor home valuations, and a weak jobs market.

This has been reflected in the Mortgage Bankers Association's (MBA) Refinance Index which plunged nearly 22% in the week ending Nov. 26 to ~2973.

Since hitting a near-term peak of 5060 in early October as mortgage rates dipped to the 4.20% area, the index has plummeted 41% — indicating how difficult it is for borrowers to take advantage of historically low record mortgage rates.

While the increase in mortgage rates is not helpful to borrowers, it does portend lower supply and an ongoing benign prepayment environment for MBS investors.

Freddie Mac also reported 15-year fixed and 5/1 hybrid ARM rates rose four basis points to 3.81% and 3.49%, respectively.  One-year ARM rates increased to 3.25% from 3.23%.

The more attractive ARM rates are attracting some interest among borrowers with the latest MBA survey showing ARM share as of percent of total applications, increasing to 5.7% from 5.3%. .

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