Freddie Mac reported mortgage rates eased to new record lows for all products in its survey for the week ending Jan. 12.

The 30-year fixed rates averaged 3.89% compared to 3.91% last week; 15-year rates fell seven basis points to 3.16%, while 5/1 hybrid and one-year ARM rates declined four basis points to 2.82% and 2.76%, respectively.

With the 30-year no point rate at 4.07%, there is increased incentive for many borrowers underlying 4.0% coupons to refinance. However, a significant response is expected closer to 3.80%.

Still, with mortgage rates lower, refinancing activity is likely to tick higher with further recovery from the year-end holidays.

For the week ending Jan. 6, the Mortgage Bankers Association's Refinance Index increased 3.3% to 3561 with adjustment for the New Year's Day holiday.

With the recent new lows in mortgage rates, Barclays Capital thinks speeds on 2010 3.5s through 4.5s could reach a new record high by the March report.

Speeds reached a high of 13.5, 24.2 and 24.9 CPR, respectively, in 2011. IFR Markets' initial consensus outlook projects speeds at 11, 19 and 21 for this vintage year and coupons. Revisions are likely in coming weeks.

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