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Economy in Brief

Mortgage Applications Up As Interest Rates Remain Down
by Tom Moeller January 25, 2006

The total number of mortgage applications rose 7.7% last week for the third consecutive weekly gain. For the month of January mortgage applications are 5.1% higher than during December.

The effective interest rate on a conventional 30-year mortgage dipped to 6.29%, down for the seventh straight week versus an average 6.48% in December and a high November average of 6.52%. The effective rate on a 15-year mortgage increased slightly to 5.95%. The interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities.

Higher applications to refinance again led the week's rise with a 7.8% increase which lifted the level of refis this month 15.8% above December.

Purchase applications recovered all of the prior week's decline with a 6.7% increase that pulled purchase applications in January 0.6% ahead of 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

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) 01/20/06 01/13/06 Y/Y 2005 2004 2003
Total Market Index 660.5 613.3 0.4% 708.6 735.1 1,067.9
  Purchase 473.7 443.9 7.9% 470.9 454.5 395.1
  Refinancing 1,773.9 1,645.2 -8.2% 2,092.3 2,366.8 4,981.8
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