Fannie Mae has launched its Refinance Application-Level Index (RALI), a weekly series designed to provide the market timely and comprehensive tracking of refinance activity and historical trends.
The RALI sources data from Fannie Mae’s Desktop Underwriter (DU) automated underwriting system to provide lenders, investors and other market participants with increased transparency on the past week’s refinance application trends, supporting more refined prepayment projections.
“We are pleased to begin sharing the Fannie Mae Refinance Application-Level Index with external users, as we believe it will support more accurate tracking, modeling, and planning of refinance activity by mortgage market participants,” states Doug Duncan, Fannie Mae’s senior vice president and chief economist.
“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,” says Devang Doshi, Fannie Mae’s senior vice president of capital markets – single-family products. “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.”
Fannie Mae’s RALI provides two measures, a dollar volume measure of unpaid principal balance (RALI ($)) and a loan count measure (RALI (count)). For the week ending June 10, 2022, which followed the Memorial Day holiday, the dollar volume of refinance applications increased 17.9% week over week. RALI dollar volume is down 69.5% compared to the same week last year. RALI count increased 16.2% week over week and is down 68.6% compared to the same week last year.