Total mortgage applications last week recovered more than all of the prior week's decline and rose 6.5%. Applications began the month 3.5% ahead of the May average which rose 6.5% versus April, according to the Mortgage Bankers Association.

Applications to refinance were quite strong posting a 10.3% w/w increase and began June 9.7% higher than in May which rose 11.2% from April.

Purchase applications rose 3.6% after the prior week's 4.1% decline to begin the month down modestly from May which rose 3.1% from 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.

The effective interest rate on a conventional 30-year mortgage fell to 5.78% from 5.83% the week prior. During only two other weeks this year has the 30 year rate been lower. The effective rate on a 15-year mortgage fell slightly to 5.41%.

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.

U.S. Economy: We're All Living on Borrowed Time from William G. Gale and Peter R. Orszag at the Brookings Institution can be found here.

Banking, Markets and Efficiency from the Federal Reserve Bank of New York is available here.