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Economy in Brief

Mortgage Applications Reach Highest in 3 Months
by Carol Stone August 18, 2004

The index of mortgage applications compiled by the Mortgage Bankers Association jumped 11.9% last week, breaking out of its recent tight range. At 689.4 (Mar 16, 1990 = 100), the index reached its highest since the first week of May.

Applications for mortgages for home purchase rose 6.2% after declining 2.7% the week before. These are 20.4% ahead of their year-ago volume.

Applications to refinance existing mortgages surged 20.9% in the latest week, following a modest 2.9% rise the prior week. These "refi's" are 28.1% below a year ago.

Mortgage applications, particularly for refinancing, are especially sensitive to interest rate movements. The widely followed FHLMC 30-year contract rate was 5.99% in the August 6 week and fell to 5.85% last week. In the industry, 6.00% stands as a kind of "flashpoint" for significant increases in refinancing activity. As seen in the graph, there is an 80% correlation of the refi index and this Freddie Mac mortgage rate.

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. In Haver's databases, these weekly data appear in "SURVEYW". There is a sizable collection of related information in USECON covering mortgage terms, debt service, and the role of securitization in the mortgage market.

MBA Mortgage Applications (3/16/90=100) 08/13/04 08/06/04 07/30/04 2003 2002 2001
Total Market Index 689.4 616.1 620.4 1,067.9 799.7 625.6
  Purchase 467.0 440.0 452.0 395.1 354.7 304.9
  Refinancing 1,982.7 1,640.5 1,600.3 4,981.8 3,388.0 2,491.0
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