With rates moving to record lows for the week ending Aug. 16, it is not surprising that mortgage applications took off. The Refinancing Index jumped 14% to 5524. This is just under November 2001's record of 5535, according to the Mortgage Bankers Association (MBA). The Purchase Index also rose 5.3% to 371.6.

As mortgage rates hold near record lows, the Refinancing Index is expected to move higher. UBS Warburg analysts predict the Index will top 6000. As a result, prepayments have been revised higher.

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