MBA Mortgage Refinance Index

The MBA Refinance Index is the Mortgage Bankers Association measure of US mortgage refinancing demand. It covers applications, defined as borrower requests for loans, from the Weekly Mortgage Applications Survey, which has run since 1990. Arabic financial outlets call it the MBA mortgage refinance index or the US mortgage refinance index.

Coverage spans single-family home loans through retail and consumer-direct channels, estimated above 75% of such US applications, and excludes wholesale, broker and correspondent loans. Results appear only as index levels and percent changes relative to March 16, 1990, never as loan counts, closings or dollar volumes. The survey produces 15 indices, and the Association calls the Refinance Index the best overall gauge of refinancing activity.

Each release covers applications submitted from Saturday at 12:00 midnight through Friday at 11:59 pm. It appears every Wednesday at 7:00 am ET for the week ending the previous Friday. Around year-end and Thanksgiving holidays MBA skips one release and reports two weeks together. Short weeks carry a holiday adjustment for fewer working days, with no seasonal adjustment for refinance.

Each release shows the Market Composite Index, the Purchase Index, refinance, ARM and government shares, plus average contract rates and points. Purchase gauges are leading indicators that typically lead home sales by four to six weeks. Refinance gauges help forecast prepayment speeds on mortgage-backed securities.

The index has no threshold or signal line, so markets read direction and year-ago change. Each week is final with no routine revision.

The index covers all refinance requests, and activity moves with rates, home values and underwriting standards.

• Conventional Refinance: captures refinance requests for conventional loans, including conforming loans within the federal limit and large jumbo balances.

• Government Refinance: captures refinance requests for government-backed loans such as FHA, VA and USDA loans.

The week ending March 27, 2020 showed refinance strength while buyers pulled back on weak outlook and job losses. The Refinance Index rose 26% on the week and 168% from a year earlier, and refinance share rose to 75.9% from 69.3%. The Purchase Index fell 11% on the week seasonally adjusted and 24% from a year earlier, while the Market Composite Index rose 15.3% seasonally adjusted. The 30-year conforming rate fell to 3.47% from 3.82%, and MBA economist Joel Kan tied the refinance jump to rate volatility.

1. Base index: every unadjusted index equals 100.00 for the week of March 16, 1990, and 110 means activity 10% above base.

1. Weekly percent change: for each group divide this-week applications Nt by last-week Nt-1 to get the percent change Pt. Use Pt = ((Nt / Nt-1) - 1) x 100.

1. Chaining: multiply last-week index It-1 by (1 + Pt / 100) to get this-week index It. For example, 5,200 versus 5,000 gives Pt = 4.00%, so 600.0 x 1.04 = 624.0, or 524% above base.

1. Seasonal adjustment: purchase and market indices remove calendar effects with a spectral, frequency-domain model.

1. Holiday adjustment: refinance indices skip seasonal adjustment but correct short weeks, while shares, rates and loan sizes stay unadjusted.

1. Rates and continuity: rates are simple lender averages with outliers removed and a minimum count rule, and post-2011 levels chain from January 14, 2011 values.