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Economy in Brief

Mortgage Applications Dropped
by Tom Moeller May 18, 2005

Total mortgage applications dropped 10.5% last week and reversed more than all of the prior week's increase according to the Mortgage Bankers Association. Nevertheless, applications so far in May are 8.0% ahead of the April average.

Applications to purchase a home slumped 10.8% w/w but in May are 5.8% ahead of April. 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 fell 10.0% w/w but are 11.0% higher than in April.

The effective interest rate on a conventional 30-year mortgage fell back below 6.0% to 5.97%. The effective rate on a 15-year mortgage was 5.59%.

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.

Credit Risk Management Guidance for Home Equity Lending from the Federal Reserve Board and other agencies is available here.

MBA Mortgage Applications (3/16/90=100) 05/13/05 05/06/05 Y/Y 2004 2003 2002
Total Market Index 699.2 781.0 6.9% 735.1 1,067.9 799.7
  Purchase 469.3 526.2 3.3% 454.5 395.1 354.7
  Refinancing 2,036.7 2,263.3 12.1% 2,366.8 4,981.8 3,388.0
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