Mortgage rates eased a further three basis points on fixed rate loans, according to Freddie Mac, to 5.04% with an average 0.7 point on 30-years and 4.47% on 15-years.

This is the third straight week of declines and keeps mortgage rates to their lowest level since the end of May when rates were below 5%.

So far in September, 30-year fixed rates have averaged 5.06%, down 13 basis points from August's average and substantially below June's average of 5.42%. In the first two weeks of September, the Mortgage Bankers Association's Refinance Index is up 24% from the previous month.

Current rate levels should spur refinancing activity this week, but a significant response is not expected unless mortgage rates move meaningfully below 5% and remain there for a sustained period. For the week ending Sept. 11, the Refinance Index actually declined 7.4% to 2455 despite attractive mortgage rate levels. The slippage was likely due in part to the Labor Day break.

On adjustable rate loan products, Freddie Mac reported one-year ARM rates fell six basis points to 4.58%, while 5/1 hybrid ARM rates were unchanged at 4.51%.

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