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Economy in Brief

Mortgage Applications Down Further
by Tom Moeller April 19, 2006

The total number of mortgage applications fell hard for the second consecutive week and posted a 1.7% drop. So far during April applications are 0.9% below the March average which fell 1.0% from February.

Purchase applications fell 2.5% w/w following the 4.7% drop to open the month but the April average so far is up 1.2% from March, which rose 0.2% versus February.

During the last ten years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

Applications to refinance slipped 0.4% after a 6.6% slide the prior week and in April are 4.1% below the March average.

The effective interest rate on a conventional 30-year mortgage rose further to 6.78% while the rate on 15-year financing rose to 6.%. Interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities and during the last ten years there has been a (negative) 82% correlation between purchase applications and the effective rate on a 30-Year mortgage.

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.

States Fight Predatory Lending in Different Ways from the Federal Reserve Bank of St. Louis can be found here.

MBA Mortgage Applications (3/16/90=100) 04/14/06 04/07/06 Y/Y 2005 2004 2003
Total Market Index 569.6 579.4 -15.3% 708.6 735.1 1,067.9
  Purchase 407.4 417.7 -12.7% 470.9 454.5 395.1
  Refinancing 1,526.1 1,532.4 -18.4% 2,092.3 2,366.8 4,981.8
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