MBA Refinance Index is a weekly index collated as well as put together by a national real estate finance industry association, the Mortgage Bankers Association. It is used to expect and forecast mortgage activity and loan repayments as reflected by the total number of mortgage refinance applications submitted.

The index is reported each Wednesday and measures only the number of applications submitted and not the actual number of closed refinance loans.

It reports the percentage change over the previous week’s index and the four week moving average so as to assist in comparison as well as determine the direction the mortgage market is moving in.

When the refinance guide indicates an increase in refinance activity, it can be bad news for investors of mortgage-backed securities.

Homeowners who refinance are prepaying the original mortgages. Mortgage investors thus lose reserves that pay a higher interest rate and see them replaced by reserves that pay a lower interest rate.

A related index, the MBA Purchase Index, processes home loan applications for buying a home rather than for refinancing.

Unlike the purchase index, the refinance index is not seasonally accustomed because seasonality does not affect refinance activity the way it affects purchase activity.

The MBA Refinance Index, along with the MBA Purchase Index, make up the market compound index. Conducted since 1990, this index is based on a review of mortgage lenders covering 75% of housing application activity.