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Economy in Brief

Mortgage Applications Recovered
by Tom Moeller January 11, 2006

The total number of mortgage applications recovered 9.9% during the opening week of 2006 following four consecutive weeks of decline. The rise, however, was to a level up just 1.0% from the December average.

Following four consecutive weeks of decline, purchase applications surged 9.3% w/w to a level 0.4% above the December average.

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 also recovered 9.9%. On top of the prior week's 8.3% gain, refis were 5.8% above December.

The effective interest rate on a conventional 30-year mortgage slipped nine basis points to 6.33%, the fifth consecutive down week, versus an average 6.48% in December. The effective rate on a 15-year mortgage also fell to 5.95%, the first week below 6% since October. 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.

MBA Mortgage Applications (3/16/90=100) 01/06/06 12/30/05 Y/Y 2005 2004 2003
Total Market Index 600.1 545.9 2.1% 708.6 735.1 1,067.9
  Purchase 457.4 418.3 16.4% 470.9 454.5 395.1
  Refinancing 1,497.5 1,363.2 -13.0% 2,092.3 2,366.8 4,981.8
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