In an unprecedented move, the Mortgage Bankers Association (MBA) Refinancing Index surged last week to new heights of 6104 for the week ending Sept. 6. Before this, the previous record was 5535 - a record set last November. As a percentage of total applications, refinancing activity represented 72.5% compared to 70.9% in the previous week. ARM activity was little changed at 12.3% versus 12.4%.
With mortgage rates holding near record lows and application activity at record highs, prepayment speeds are expected to increase through October's report and hold steady in November. Currently, UBS Warburg predicts 2001 Fannie Mae 30-year 6s to prepay at 39% CPR in October, 2001 6.5s at 61% CPR, and 2001 7s at 65% CPR. This compares to 19%, 14%, and 48%, respectively, in the August report.