For the week ending Sept. 10, 30-year fixed mortgage rates averaged 5.07% with an average 0.7 point, down one basis point from last week's average, according to Freddie Mac's weekly survey.

With rates holding close to 5%, mortgage application activity should be responsive.

Yesterday, the Mortgage Bankers Association reported a nearly 23% jump in the Refinance Index to the 2636 area for the week ending Sept. 4 as mortgage rates dropped to 5.08% from 5.14%.

Current rate levels are the closest mortgage rates have been to below 5% since the end of May. Credit Suisse analysts said.

However, that for a significant and sustained pick-up in refi activity, they believe rates need to be sustained well below 5% levels. Even if this occurs, the Refinance Index is not likely to reach levels that would be associated with historically low mortgage rates as most credit worthy and reactive borrowers refinanced earlier this year, leaving poorer credit borrowers.

Additionally, since the previous rate lows of last spring, home prices have declined further and unemployment has risen.

In other term programs reported by Freddie Mac, 15-year fixed mortgage rates slipped two basis points to 4.50%, 5/1 hybrid ARMs declined to 4.51% from 4.59%, while one-year ARM rates rose two basis points to 4.64%.

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