Mortgage application activity slipped 1.4% in the week ending Sept. 17. The Mortgage Bankers Association reported that the Refinance Index declined 0.9% to ~4356.

This makes the third week in a row that refinancing activity declined since hitting a recent peak of 5085 in the week ending Aug. 27.

As a percent of total applications, refinancing share was higher, however, to 81.1% from 80.5% as the average contract interest rate for 30-year mortgages fell to 4.44% from 4.47% with points lowering to 0.81 from 1.08 for an 80% LTV loan. 

Meanwhile, the Purchase Index fell 3.3% to ~178.

Refinancing activity has been relatively muted considering current mortgage rates. Factors that have limited activity have been capacity constraints at mortgage lenders, while the primary-secondary spread has been relatively wide.

This is beginning to change with reports lenders are adding capacity and competition for market share increasing, while the primary-secondary spread has narrowed to around 100 basis points from 120 to 130 basis points in August. 

This should help to push mortgage rates lower and stimulate refinancings on a subsequent rates rally.

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