New refinance application index launched
Fannie Mae has developed a new tool for monitoring refinance application trends.
The Refinance Application-Level Index (RALI) generates data from Fannie Mae’s Desktop Underwriter to track changes in refinance activity and historical trends while delivering “more refined prepayment projections.”
Doug Duncan, senior vice president and chief economist for Fannie Mae, said the index “will support more accurate tracking, modeling, and planning of refinance activity by mortgage market participants.”
The index also provides a dollar volume measure of unpaid principal balance and a loan count measure.
The first RALI report for the week ending June 10 showed that the dollar volume of refinance applications increased 17.9% week over week but was 69.5% lower than the same week a year ago. The RALI count rose 16.2% from the previous week and was down 68.6% from last year.
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“Forecasting refinance originations and prepayments has become more challenging in the past two years, as the observed relationship between refinance incentive and prepayments has evolved,” said Devang Doshi, senior vice president of capital markets – single-family products at Fannie Mae. “The RALI has been a strong leading indicator for prepayment activities, and we believe the additional transparency it brings industry participants will improve prepayment modeling performance.”
The index will be updated and published weekly each Tuesday at 10:00 am ET.
