Mortgage rates inched lower in the latest report from Freddie Mac. For the week ending June 10, the 30-year fixed mortgage rate averaged 4.72% with an average 0.7 point compared to 4.79% last week. 

While this puts the no point rate at around 4.90%, it's still not seen as low enough to lead to a significant pick up in refinancing activity.

Barclays Capital analysts believe it will take a decline in the no-point rate to under 4.75% to stimulate refinancing activity, which they think would require the 10-year note yield to rally to below 2.80%.

This would stimulate refinancing of 2009 vintage 4.5s and 5s, which have good credit and LTV.

In the other mortgage lending programs, Freddie Mac reported 15-year fixed mortgage rates slipped three basis points to 4.17% - a new record low; 5/1 hybrid ARMs were two basis points lower to 3.92%. The one-year ARM rate at 3.91%, down four basis points from last week, is at its lowest level since late May 2004.

For the holiday-shortened week ending June 4, refinancing activity declined on a seasonally adjusted basis by over 14%, according to the Mortgage Bankers Association (MBA). This is despite favorable rate levels. 

Taking day count into consideration, Credit Suisse noted that the Refinance Index was slightly changed week over week.

"Despite the historically low rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance," said Michael Fratantoni,MBA's vice president of research and economics.

As a result, only a limited response is expected in refinancing activity in next week's MBA report despite historically low mortgage rate levels. 

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