The Mortgage Bankers Association (MBA) reported that the MBA Refinancing Index rose to 2319.8 for the week ending Oct. 31, which is a rise of 0.3% relative to the 2311.8 level the previous week. Meanwhile, the Purchase Index increased significantly to 404.3 from 363.9 the previous week — which is an 11% hike from the prior week. The share of refinancings dropped to 51.1% from 53.3% a week ago.

Though the rise in the Refinancing Index was somewhat below Citigroup Global Markets’ expectations, it remained generally consistent with recent historical trends, wrote analysts at the firm in a report released this morning. The increase is attributed mostly to a drop in mortgage rates, which dipped by about five basis points to 10 basis points week-over-week.

Based on Citigroup’s analysis, it seems the Refi Index’s reactivity to changes in mortgage rates has declined substantially over the past two months. This drop could be seen as a sign of the disappearance of the media effect. Another probable cause for the drop is burnout.

According to Citigroup’s survey of lenders’ Web sites, primary mortgage rates vary between 5.75% and 6.25%.  Citigroup added that the spread between the No-Point Survey Rate and Base Mortgage Rates has dropped to about 30 basis points. Analysts are linking this tightening to a drop in the application volume. With the refinancible universe significantly smaller than a few months ago, lenders often cut their margins to attract more borrowers.

In the meantime, Countrywide Securities expects the Freddie Mac survey rate to move back above 6% from last week's 11 basis point drop to 5.94%. Citigroup expects the Freddie survey rate to stay about flat at about 5.96%.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.