The Mortgage Bankers Association Refinancing Index rose to 2195.7 for the week ending Jan. 9, an increase of about 25.1% versus the holiday adjusted level of 1755.4 the prior week.
This increase in the Refi Index is likely a result of the 5-to10 basis point decrease in weekly average mortgage rates, said Citigroup Global Markets in a report released this morning.
The bank expects a noteworthy rise in the MBA Index because of this week’s drop in mortgage rates to levels not seen for the past three months. This latest interest rate move puts an end to the four-month period where rates zigzagged within a narrow band of around 40 basis points.
Additionally, the end of the holiday season might have influenced the jump in refis, Citi analysts said.
Meanwhile, JPMorgan Securities said the Refinancing Index would probably move into the mid-3000 range next week, if the 30-year no-point mortgage rate stays around 5.625%. The market is only 25 basis points away from a surging 6000 Refi Index, JPMorgan speculates.
The MBA Purchase Index increased about 11% (from 445.9 from 401.3) week-over-week on a seasonally adjusted basis, which has brought the Index to pre-holiday levels. The Refinance share of mortgage activity rose to 51.6% of total applications, increasing from 49.7% the previous week.
Citi expects the Freddie Mac Survey Rate to drop to a value slightly lower than 5.70%. Countrywide Securities also predicts that the survey rate will report near the area of 5.70%, given the rally in rates on Friday and the current level of market rates.