Mortgage rates rose for their fourth straight week for the week ending April 14. According to Freddie Mac, 30-year fixed mortgage rates averaged 4.91% with an average 0.6 point versus 4.87% last week.

Rates are at their highest level since Feb. 24. With the no-point rate above 5%, 4.5% credit-eligible coupons and lower, along with a portion of 5%s, remain outside of the refinancing window. This factor should pressure refinancing activity. 

Yesterday, the Mortgage Bankers Association reported a 7.7% drop in the Refinance Index to 1924 and since rates hit their near-term low of 4.76% in mid-March, the Refinance Index has declined 22%.

In other terms, 15-year fixed rate and one-year ARM rates increased three basis points to 4.13% and 3.25%, respectively, while 5/1 hybrid ARMs jumped six basis points to 3.78%.

Tight underwriting, along with the outlook for housing and even interest rates will continue to limit refinancing activity and thus keep prepayment speeds relatively slow.

In yesterday's Beige Book comments, the Districts reported the residential real estate market continued to flounder. The report noted that there was little change in the residential real estate markets for most districts with half citing some pockets of weakening. It also stated that the real estate markets for single family homes changed little from the low levels or continued to weaken across all districts and that credit standards at several districts were unchanged or slightly tighter.

While the housing anecdotes were mostly discouraging, the report did observe that a few districts were seeing a pickup in inquiries, showings and traffics. However,this is somewhat expected given the time of year.

While foreclosure activity as reported by RealtyTrac reported a three-year low in the first quarter, CEO James J. Saccacio anticipates that foreclosure activity will pick up as lenders and servicers work through a backlog caused by issues related to documentation.  Their report noted that judicial foreclosure states, such as Florida and Massachusetts "accounted for some of the biggest quarterly and annual decreases in the first quarter."

Foreclosure filings in March were up 7% from February and were reported on 239,795 U.S. properties, according to RealtyTrac. For the quarter, 681,153 properties received a foreclosure filing, or 1 in every 191 U.S. housing units, a 15% decline from 4Q10 and a 27% drop from a year ago. Nevada, Arizona and California remained the top three states in terms of foreclosure rates, while California and Florida remained tops in terms of number of properties that received a foreclosure filing.

Distressed inventory will continue to pressure home price valuations. A new report from JPMorgan Securities analysts projected further price declines of 3% to 4% from the fourth quarter in the Standard & Poor's/Case-Shiller Home Price Index with a bottom expected in mid-2011. They anticipate a slow and modest housing recovery in 2012-2013.

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