Mortgage rates were mixed in the week ending Jan. 20. According to Freddie Mac's weekly survey 30-year fixed rates rose three basis points to 4.74%, after two weeks of declines. Meanwhile, 15-year fixed rates slipped three basis points to 4.05%.

With the no-point rate holding near 5%, refinancing activity is likely to remain muted as a large percent of the credit-eligible 30-year fixed mortgage rate has little incentive, while many borrowers remain constrained by low housing values and tight credit conditions. For the week ending Jan. 14, the Mortgage Banker Association's Refinance Index stood at 2390, down 53% from early October when mortgage rates were in the 4.20%-4.30% area.  

ARM rates were similarly mixed with 5/1 hybrid ARMs averaging 3.69% compared with 3.72%, while one-year ARMs increased to 3.25% from 3.25%.

In a recent report from Freddie Mac, the GSE noted that ARMs were financing just 7% of new home purchases compared to 40% in June 2004. However, ARM share has improved from the early 2009 level of 3%.

"Homebuyers have shied away from ARMs because they are wary of the risks," said Freddie Mac Chief Economist Frank Nothaft. "We are expecting ARMs to gradually gain back some favor with mortgage borrowers, rising to an average 9 percent share of the home purchase market in 2011," he added.

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