Mortgage application activity fell 12.9% in the holiday-shortened week ending Jan. 14 with both refinancings and purchases declining.

According to the Mortgage Bankers Association (MBA), the Refinance Index plunged 15.3% to ~2024 — its lowest level since the beginning of January 2010.

Meanwhile, the Purchase Index was down 8.7% to ~172.5. The data was not adjusted for the Martin Luther King, Jr. holiday.

Contributing to the lower activity was higher mortgage rates. The average contract interest rate for 30-year fixed mortgages increased three basis points to 4.80% with points on 80% LTV remaining elevated at 1.19 versus 1.20 previously.

As a percent of total activity, refinancing share dropped to 70.3% from 73.0%, while ARM share increased to 5.2% from 5.0%.

In the first three weeks of January, refinancing activity is down over 9% on average from December, with 30-year mortgage rates up just three basis points on average to 4.74%.

Looking ahead to February and March prepayments, which will be influenced by January's activity, speeds are projected to decline by around 20% in February for 30-year FNMAs, with a lower day count also factoring in.

This follows a 20% decline that is anticipated in January prepayments. Meanwhile, March speeds are expected to be flat to slightly higher, primarily as it has four additional collection days.

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.