The Mortgage Bankers Association Refinancing Index increased by 8.5% to 1479.4 for the week ending June 11, 2004. Though the prior week was shortened by the Memorial Day holiday, the Index still increased by 9% holiday-adjusted.
Citigroup Global Markets said despite the Memorial Day holiday and President Reagan's funeral making a precise comparison of refinancing activity over the past few weeks more difficult, it seems after five weeks of drops the index has stabilized at around 1500.
Yesterday's 20 basis point rally is unlikely to lead to any considerable rise in the next release of the index since rates have only dropped to the levels seen in the beginning of June. Analysts think that a rate drop of another 10 basis points to 15 basis points is needed to reverse the index's downward trend and to raise it over 2000 once again.
Mortgage applications filed over the previous week will probably close in July. The MBA Purchase Index increased by 4% week over week on a seasonally adjusted basis to 449.5. The share of refinancings increased to 30% from 29% a week ago. The average loan size of a conventional refinancing loan increased slightly from $189,900 to $190,000. The current ARM share is 48% on a dollar volume basis. As interest rates increase, the popularity of lower-rate ARM products typically tends to increase.