The Mortgage Bankers Association reported mortgage application activity dropped 14.9% in the week ending October 14 in response to further increases in mortgage rates. 

Mortgage rates increased between five and eight basis points over the survey period with 30yr fixed conforming rates averaging 4.33%, jumbos at 4.64%, and FHA at 4.12%.

The Refi Index plunged 16.6% to ~3396 - its lowest level since the end of July. As a percent of total applications, refi share was at 77.6% versus 79.1% in the previous survey.  The report included additional information regarding the share of refi applications by region for the month of September; the Pacific region declined in the month, while the Mid-Atlantic, East North Central and New England regions were higher.  In particular, Vermont experienced the largest increase in refi applications.

Meanwhile, the Purchase Index was down 8.8% to ~162 which the MBA said was its lowest since December 1996. For the month of September, the MBA said the share of purchase applications rose in the Pacific region, but declined in New England, East North Central and South Atlantic regions. The state with the highest share of purchase applications was Wyoming.

The near term outlook for speeds is relatively tame. Speeds are currently projected to increase around 5% to less than 10% on average for October in IFR Markets' sample. The largest percentage increases continue to be 5% coupons and lower. 

Factors influencing activity include a lower day count at 20 from 21, as well as, lower refinancing activity with the MBA's Refi Index down 4% on average for September versus August despite mortgage rates in Freddie Mac's survey averaging 4.08% compared to 4.26%. Looking further out to November and December, speeds are seen increasing less than 5%.

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