Last week, the total number of mortgage applications recovered about half of the prior period's decline with a 2.3% rise according to the Mortgage Bankers Association. The modest increase followed weekly declines from June to October and left applications 17.5% below the monthly peak during June.

Purchase applications rose for just the second week in the last eight and the 6.4% rise reversed nearly all of the prior week's decline. Nevertheless purchase applications remained 6.0% below the July peak. 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.

Applications to refinance continued down another 3.4% leaving the level of refi's nearly one third below the recent peak in June and 79.5% below the monthly high during 2003.

The Federal Home Loan Mortgage Corporation reported that 72% of refinances resulted in a 5% higher loan amount during 3Q '05, nearly double the percentage during 2003.

The effective interest rate on a conventional 30-year mortgage rose to 6.58% from 6.46% the prior week while the effective rate on a 15-year mortgage rose to 6.19%, the highest since July 2002. The interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities.

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.

A rising housing tide from the Federal Reserve Bank of Minneapolis can be found here.