The Mortgage Bankers Association  (MBA) reported this morning that mortgage applications were up only marginally from the previous week. The Seasonally Adjusted Refinancing Index rose only by 1% to 9163 the week ending June 13, rising from 9046.9 the week previous. This increase followed another 10 basis points dip in mortgage rates, which was significant, said Citigroup in a report released this morning.

At the start of the current week, secondary market mortgage rates backed up roughly 15 basis points, reported Citigroup. Primary market mortgage rates are probably going to follow suit shortly. “The rise in rates may convince some homeowners that the time to refinance is running out; consequently, the index may remain near record levels for another week or two,” wrote analysts.

They added that in the last few days, secondary market mortgage rates backed up. However, this rise has not yet fully filtered through to the primary market. Citgroup’s survey of lenders’ Web sites shows that no-point rates vary between 5.125% and 5.75%. Meanwhile, the spread between primary and secondary market mortgage rates remained very wide. The Freddie Mac Survey Rate, which reflects mortgage rates at the start of the week, will be released tomorrow. Citigroup expects Freddie’s survey rate to rise to roughly 5.23%.

Citigroup also said that the overall number of mortgage applications filed over the last four weeks, which is based on the MBA Conventional Fixed-Rate Index, is roughly 5% more than the one last March 2003 — this includes both refinancings and purchases. The firm said this implies prepayment speeds in June will rise to roughly five percent to 10% above April speeds, and about 15% to 20% increase versus May speeds.

Citigroup also said that Fannie Mae June aggregate speeds will probably rise to 52% CPR from 45% CPR in May. Freddie June aggregate speeds will likely increase a little less, to 54% CPR from 48% CPR in May. The firm did not account for any residual effect from the March refinancings spike in its estimate of June speeds. Analysts believe that the bulk of March applications have already been processed.

Kevin Jackson, vice president at RBC Dain Rauscher Inc., said that the Refinancing Index has flirted with the 10,000 mark at least three times since mid March. “With mortgage rates at half-century lows, we could hit the 10,000 mark very soon as prepayments continue to be robust,” Jackson wrote.

Meanwhile, the Purchase Index remained flat at 419.1, compared to 418.9 in the previous report. In terms of type, conventional refinancings rose by1% to 10,210,while Government refis were stronger, increasing 5% to 3646.

Citgroup said that the government index has been growing more rapidly compared to the conventional index in three of the last four weeks. Analysts stated that this may mean a bigger increase in Ginnie Mae speeds versus conventionals in the next couple of months.

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