Despite mortgage rates holding near their lowest since the end of May, mortgage application activity declined in the holiday-shortened week ending Sept. 11. 

The Mortgage Bankers Association (MBA) reported the Refinance Index declined 7.4% to around 2455, while the Purchase Index dropped 10.3% to the 273 area. 

As a percentage of total applications, refinancing share increased to 61% from 59.8%. 61% is the highest share since the end of May when rates were below 5%.  ARM share rose to 6.0% from 5.8%.

So far in September, the Refinance Index is averaging 24% higher compared to August as mortgage rates average 5.075%.  This implies that there will be modest increases in prepayment speeds for October, which are  reported in November. 

Current projections for October have speeds projected 5% higher from September's expectation, with the largest percentage increases in 5s and 5.5s. 

In November, prepayment speeds are currently predicted to be essentially flat with larger percentage declines in higher coupons. 

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.