As expected, mortgage application activity was lower in response to mortgage rate levels above 5%. 

For the week ending Oct. 23, the Mortgage Bankers Association (MBA) reported the Refinance Index fell 16.2% to about 2353, while the Purchase Index slipped 5% to 255. After reaching a recent high of 3377 for the week ending Oct. 2 as mortgage rates fell into the high 4.80s, the Refinance Index has dropped over 30%. 

As a percent of total applications, refinancing share declined to 62.3% from 65% previously. ARM share increased to 6.9% from 6.4%.

The MBA also reported the average contract interest rate for 30-year fixed rate mortgages slipped three basis points to 5.04% with points increasing to 1.25 from 1.13. 

With the recent increase in mortgage rates and decline in refinancing activity, there's been some downward revisions to the outlook for December speeds (reported in January) beginning to show. 

Overall, speeds on FNMAs are expected to remain little changed, with slight increases in 5s and 5.5s offsetting the slowing anticipated in 6s and 6.5s.

November speeds (reported in December) are expected to prepay 6% faster than October's estimates.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.