Mortgage rates remained almost the same this week as reported by Freddie Mac in its weekly survey.
The agency reported just a basis point increase in 30- and 15-year fixed-rate mortgage rates to 6.10% and 5.78%, respectively.
ARM rates, meanwhile, were slightly lower. The five-year hybrid ARMs averaged 6.0% versus 6.02% the previous week, and one-year ARMs slipped four basis points to 5.12%.
Mortgage rate levels are not likely to stimulate mortgage application activity as expectations are they should turn lower as recently experienced following the GSE takeover and ahead of the escalation in the crisis following the Lehman Brothers collapse and the government's $700 billion bailout plan.
The 30-year fixed mortgage rates declined to 5.78% on Sept. 18, but have backed up 32 basis points since then. This week, there has been the added uncertainty about passage of the government"s bill to further stall activity. Credit has become increasingly tight as well in the past couple of weeks necessitating global central bank response to try to inject liquidity into the system.
Yesterday, the Mortgage Bankers Association reported a 35% drop in the Refinance Index to 1334. This is down from 2300 hit for the week ending Sept.12 in response to the brief period where rates dropped below 6%.
The drop in mortgage rates is expected to stimulate prepayments in October (report released in November).
October speeds are projected to jump 58% in FNMAs from September's average, about twice as much as previously predicted.
Ginnie Mae speeds are estimated to increase about 21%. Mortgage rates averaged 44 basis points lower to 6.04% in September compared with August's average, while the Refinance Index averaged 64% higher. The month also has one extra collection day.
November prepayment speeds are currently expected to be 15% slower in response to the drop in activity, slowing seasonals and four less collection days.