For the week ending May 22, the Refinance Index plunged 18.9% to 3890.4, according to the Mortgage Bankers Association. This is its lowest level since early March.

Contributing to the drop was higher mortgage rates. They reported the average contract interest rate for 30-year fixed mortgages jumped 12 basis points to 4.81%.

So far in May, the Refi Index has averaged 4425, down 26% from April's average, even as mortgage rates have averaged just three basis points higher to 4.84% based on Freddie Mac's weekly survey.

As a percentage of total applications, refinancing share declined to 69.3% from 73.6% and also is at its lowest percentage share since early March. ARM share rose to 2.6% from 2.4%.

At this time, consensus projections on prepayments for June (reported in July) are for speeds to increase 10%; however, recent performance of the Refi Index suggests possible downgrades.

Purchase Activity rose 1% to 256.6 as buyers take advantage of the historical low mortgage rates, drops in home values, and the tax credit for first time homebuyers this year.

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.