As expected, the Mortgage Bankers Association (MBA) Refinancing Index responded to the drop in rates over the past several weeks. According to the MBA, the Refi Index rose 20% to 3005.5 for the week ending Oct. 3, rising from 2505.8 the previous week. The Purchase Index also rose significantly, gaining 11% to 441. 1 from 398.8 the week prior.
A report by Citigroup Global Markets said this is the first time since the start of August that the Index went above the 3000 level. The firm added that the rise in the Index was most probably a result of the relatively low mortgage rates at the beginning of past week, before rates backed up considerably at the end of past and the beginning of this week.
With the backup in rates over the past four days, the percentage of the refinancible mortgage universe dropped to about 33% from about 40% a week ago. With this development, the event of another major refinancing wave is becoming less likely. Citigroup believes that rates would need to drop by approximately 75 basis points before refinancing activity would pick up significantly. A roughly 100 basis points dip in rates is needed in order for the Index to break the June record, when the Index reached roughly 10,000, said Citi.