The Mortgage Bankers Association (MBA) reported this morning that its seasonally adjusted refinancing index dropped to 6657.2, for the week ending July 11, 2003, from 6768.3 the previous week. This was a 2% drop. Compared to the prior week’s raw number, the refinancing index increased 23%. The small amount of the drop (versus the holiday-adjusted value for the week prior) is slightly surprising, considering a significant 15 basis point rise in mortgage rates, said Citigroup in a report released this morning.

“It is likely that the MBA underestimated the strength of the holiday-related slowdown during the week of July 4,” Citigroup wrote. They said that if a 1.5-day adjustment is assumed for July 4 (rather than one-day adjustment that the MBA used), the index declines for the weeks of July 4 and July 11 would have been 11% and 14%, respectively. These dips are more in line with interest rate increases over these two weeks.

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