· The
total number of mortgage applications fell a hard 6.8% last week to the
lowest level since mid-2002 and pulled the average level during December
down 6.0% from November.
· Purchase applications were notably weak, again. The 4.5% w/w drop was the third consecutive weekly hard decline and was to the lowest level since mid-February. The December average of purchase applications was off 1.7% from November.
· During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales
· Applications to refinance were even weaker. An 11.2% w/w plunge pulled the December average 13.0% below November.
· The effective interest rate on a conventional 30-year mortgage was steady at 6.44% versus 6.45% the prior week. Rates averaged 6.52% in November and averaged 5.81% in June. The effective rate on a 15-year mortgage also was steady at 6.06%. The interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities.
· The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.