The MBA Refinancing Index rose to 6079 for the week ending May 2, 2003, which is a 19% increase over the previous week’s level of 5104. However, despite the increase, Citigroup said that this week’s index value is still 35% below the March peak of 9387.
The increase in the index could be mostly attributed to a decline in mortgage interest rates. Mid last week, mortgage rates got very close to the recent lows that were reached in the beginning of March. The No-Point Survey Rate actually tested the March record low last Thursday, said Citigroup. However, mortgage rates backed up on Friday, but dipped again this week after the FED meeting.
As of yesterday, mortgage rates were at or close to record lows , said Citigroup. This is why next week the MBA Refinancing Index is expected to spike once again, although analysts do not believe that the Index will surpass its March peak. Due to the decline in mortgage rates, prepayment speeds may remain elevated longer than Citigroup previously thought.