This is simply an indication of the lack of funds in the system AND the fact that the Fed is not keeping rates artificially low. The real rate, i.e. the market rate that would emerge without any Fed money manipulations, must be very low, otherwise people would be scooping up mortgages at current rate levels.
Of course, other government manipulations are distorting markets, making them very difficult to read. The April 30 deadline for up to $8,000 in tax credits has passed, so it is possible many homeowners rushed to complete sales before that deadline, but still if the current mortgage rate was substantially below a non-manipulated rate you would see borrowers everywhere.
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