Mortgage application activity declined 10.9% on a seasonally adjusted basis for the week ending Jan. 22 despite mortgage rates dipping to 4.99% from 5.06% based on Freddie Mac's survey. 

According to the Mortgage Bankers Association (MBA), the Refinance Index dropped 15.1% to ~2263, while the refi share as a percent of total applications fell to 67.6% from 71.7%.

Michael Fratantoni, vice president of research and economics at the MBA, said "although rates remain low, there appears to be a smaller pool of borrowers who are willing and able to refinance at today"s rates."

Meanwhile, the Purchase Index was also lower, slipping 3.3% to ~216. However, it is expected to firm into the spring as borrower take advantage of the homebuyers tax credit before it expires on April 30.  

At this time, prepayment speeds are seen slowing in February (released in March) by around 10% to 15%, following declines in January. 

Speeds are seen picking back up in March, which can be partly attributed to a higher day count. 

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