Mortgage application activity declined in the week ending October 16 in response to slightly higher mortgage rates. Also influencing the results were an adjustment for the Columbus Day holiday. According to the Mortgage Bankers Association (MBA), the seasonally adjusted Refi Index dropped 16.8% to around 2807, while the Purchase Index was down 7.6% to about 268.

As a percent of total application activity, refinancing share declined to 65% from 67.4% previously. ARM share was higher at 6.4% from 6.2%. The MBA also reported the average contract rate for 30-year fixed rate mortgages rose five basis points to 5.07%.

Mortgage application activity isn"t likely to jump back up unless mortgage rates drop back below 5%, and really significantly below. Barclays Capital analysts say a refi wave is unlikely unless the no-point rate drops below 4.75%.

At this time the outlook for speeds in November, when the impact of the recent activity begins to show, are for speeds to be modestly higher. Fannie speeds are expected to prepay 8% faster than October"s estimates, while Ginnies are estimated at 4% faster.

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