Mortgage rates were modestly higher this week, according to Freddie Mac's weekly survey. 


The 30-year fixed mortgage rate rose five basis points to 5.25%, with an average 0.7 point. This is equivalent to a no-point rate above 5.40% and makes borrowers less responsive to refinancings. 


This was evident in yesterday's report for the week ending July 24 from the Mortgage Bankers Association (MBA). The Refi Index declined 11% to 1862. Credit Suisse analysts stated that, "mortgage rates need to be sustained below the psychologically important 5.00% level before we see any meaningful pick-up in refi activity." 


In the other borrowing programs, 15-year fixed mortgage rates and 5/1 hybrid ARM rates increased just a basis point to 4.69% and 4.75%, respectively. Meanwhile, one-year ARM rates averaged 4.80% compared with 4.77% last week. 


It is notable that the ARM share has increased as ARM rates have been steadily declining while fixed rates have been increasing. For example, as a percent of total application activity, the refinance share fell to 52.6% from 55.5% as ARM share rose to 5.5% from 4.8% in the latest MBA report. When fixed rates hit a low of 4.78% in early April, 5/1 hybrid ARM rates were 14 basis points higher at 4.92%, now 5/1 hybrid rates are 50bps lower. 


For the month of July, 30-year fixed mortgage rates averaged 5.22%, down 20bps from June"s average. Despite the improvement, the Refinance Index through last week  averaged 6.5% lower than June's average. 


August and September prepayment reports, which will be released in September and October, respectively, are where these rate levels and refinance activity will be reflected. The conventional speeds are currently projected to slow 10% with September holding flat. 



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