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Economy in Brief

Lower Rates Spurred Mortgage Applications
by Tom Moeller September 7, 2005

The total number of mortgage applications jumped 6.8% last week and recovered to the highest level since late July, according to the Mortgage Bankers Association.

Mortgage applications to refinance surged 7.7% w/w to the highest level since July as the effective interest rate on a conventional 30-year mortgage fell further to 5.87% from 5.98% the prior week. The effective rate on a 15-year mortgage also fell to 5.47%.

Purchase applications surged 6.1% after two weeks of sharp decline but the average level in August fell 1.3% from July. 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.

MBA Mortgage Applications (3/16/90=100) 09/02/05 08/26/05 Y/Y 2004 2003 2002
Total Market Index 771.6 722.5 11.5% 735.1 1,067.9 799.7
  Purchase 499.1 470.6 4.9% 454.5 395.1 354.7
  Refinancing 2,357.1 2,187.8 20.9% 2,366.8 4,981.8 3,388.0
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