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Economy in Brief

Mortgage Applications Up, Rates Stable
by Tom Moeller July 12, 2006

The total number of mortgage applications added 1.0% last week to the prior week's 5.9% gain. The rise lifted applications early in July 2.5% above the June average which fell 1.5% from May.

Purchase applications increased 2.6% and raised the early July level 4.8% above the June average which fell 0.8% from May.

During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

Applications to refinance fell 1.6% and the latest level was 1.4% below the June average. Refis during all of June fell 3.1% from the May average.

The effective interest rate on a conventional 30-year mortgage was stable w/w at 7.02% but the rate on 15-year financing ticked higher to 6.70%. Interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities.

During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest 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.

MBA Mortgage Applications (3/16/90=100) 07/07/06 06/30/06 Y/Y 2005 2004 2003
Total Market Index 566.8 561.0 -28.4% 708.6 735.1 1,067.9
  Purchase 425.0 414.2 -13.1% 470.9 454.5 395.1
  Refinancing 1,400.5 1,423.9 -45.2% 2,092.3 2,366.8 4,981.8
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