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Economy in Brief

Mortgage Applications Down With Less Refinancing
by Tom Moeller August 10, 2005

Total mortgage applications fell last week for the sixth decline in the last eight weeks according to the Mortgage Bankers Association. The 0.9% w/w decline lowered the starting level in August 5.8% below July which fell 1.4% from June.

Mortgage applications to refinance continued to decline as interest rates moved higher. The 3.3% w/w decline was the sixth in the last eight weeks and it lowered refi's 26.7% from the peak in early June.

During that period, the effective interest rate on a conventional 30-year mortgage rose to 6.16% from 5.87%. The effective rate on a 15-year mortgage also rose to 5.81%.

Purchase applications nevertheless continued to strengthen. Last week a 0.9% w/w gain lifted the starting level in August 0.6% above the July average which rose 0.9% versus June. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

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.

Monetary Policy and Asset Price Bubbles from the Federal Reserve Bank of San Francisco is available here.

MBA Mortgage Applications (3/16/90=100) 08/05/05 07/29/05 Y/Y 2004 2003 2002
Total Market Index 745.0 752.1 20.9% 735.1 1,067.9 799.7
  Purchase 498.8 494.5 13.4% 454.5 395.1 354.7
  Refinancing 2,176.5 2,250.3 32.7% 2,366.8 4,981.8 3,388.0
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