The Mortgage Bankers Association (MBA) reported this morning that the Refinancing Index declined approximately 10% to 8204.6 from 9162.7 the previous week .
Citigroup, in a report released shortly after the MBA's announcement, said that dip in the index is primarily due to a backup in mortgage rates. The report said that the Base Mortgage Rate, based on secondary market prices, increased 16 basis points week-over-week. The no-point survey rate, based on primary market rates, also increased by nine basis points
Citigroup said that in first two days of the current week, mortgage rates dropped. If this trend persists, next week’s MBA Refinancing Index may be higher. Nevertheless, the values of the index for the past three weeks are below the levels suggested by previous experience. Citigroup said that this might indicate burnout as well as changes in the composition of the mortgage universe.
After backing up significantly in the past week, mortgage rates have been rallying for the past two days. Primary market mortgage rates are approximately 10 basis points over their record low reached about two weeks ago. According to Citigroup’s survey of lenders’ Websites, no-point rates are varying between 5.125% and 5.75%.
Although the spread between primary and secondary market mortgage rates declined by roughly five basis points, it remained relatively wide .
Citigroup expects the Freddie Mac Survey Rate to increase to approximately 5.26% when it is reported tomorrow. Countrywide Securities predicts an increase in the survey rate to between 5.30% and 5.35%.
Meanwhile, Citigroup also noted that the government index has been growing faster, or rather declining more slowly than the conventional index, in four of the last five weeks. This might imply larger increases in Ginnie Mae speeds versus those of conventional collateral going forward.