Freddie Mac reported new lows in 30- and 15-year fixed mortgage rates in the week ending May 17.
The 30-year rates fell four basis points to 3.79% with an average 0.7 point, which puts the no- point rate at under 4.0% to 3.97%.
With the increased percentage of borrowers underlying the 3.5% coupon with an attractive incentive, refinancing activity should see further gains in the Mortgage Bankers Association's (MBA) next report for the week ending May 18.
Yesterday, the MBA reported a 13% jump in the Refinance Index to 4220 for the week ending May 11 and it needs just a 7.5% gain to match this year's high of 4538 in February when mortgage rates hit new lows at that time.
If the Refinance Index continues to strengthen, speeds on the lower portion of the coupon stack are likely to be revised higher for June. Currently, 2010 FNMA 3.5s are projected to increase around 14% following a 6% predicted increase in May, while 2010 and 2011 4.0s are expected to be 7% and 15% higher from an estimated 5% and 8%.
In the other loan programs, 15-year rates slipped one basis point to 3.04%; while 5/1 hybrid ARMs and one-year ARM rates rose two and five basis points, respectively, to 2.83% and 2.78%.